From the perspective of the lending financial institution, there is a ____ degree of interest rate risk for ____-maturity mortgages.

Question

Quizplus · Accepted Answer

From the perspective of the lending financial institution, there is a higher degree of interest rate risk for longer-maturity mortgages because the longer the term of the loan, the more uncertain the future interest rates are, making it harder to predict the cost of funds over time. Conversely, there is a lower degree of interest rate risk for shorter-maturity mortgages because the shorter the term, the less exposure to the fluctuation of interest rates, making it easier to manage and predict costs.

From the Perspective of the Lending Financial Institution, There Is