Emeritus Prof Christopher May on Nostr: Now here's an interesting development in #financialservices: #Interestrates on #debt ...
Now here's an interesting development in #financialservices:
#Interestrates on #debt include a substantial element that prices in the risk of default. So a higher interest rate indicates a judgement about your propensity to repay the loan.
April Mortgages are launching a model (from the #Netherlands) that sees the interest rate decline at the loan is repaid (and the risk of default declines).
This also suggests longer #mortgages in the UK have over priced residual risk....to #banks' benefit!
#Interestrates on #debt include a substantial element that prices in the risk of default. So a higher interest rate indicates a judgement about your propensity to repay the loan.
April Mortgages are launching a model (from the #Netherlands) that sees the interest rate decline at the loan is repaid (and the risk of default declines).
This also suggests longer #mortgages in the UK have over priced residual risk....to #banks' benefit!