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Apr 15, 2010 by Shena | Posted in Other - Business & Finance

What kind of borrowers do you think would prefer variable rate to fixed rate loans?

A higher proportion of variable rate loans tend to be made when all interest rates are higher than normal. Why might this be the case?

Banks will maximize profits any way they can. An adjustable rate means they will always make the same maximum profit from a loan, no matter what the Federal interest rates do.
Borrowers who prefer variable rates tend to be bad with money and easily

Nov 12, 2008 by ldbmom1 | Posted in Other - Business & Finance

When would a bank that has multi year fixed rate loans that are financed by short term deposit liabilities be vulnerable to an increase in short term interest rates?

When? Continuously. That is how the system works. When a bank needs to offer higher rates to depositors to attract deposits, it will raise the rates it charges for its fixed-rate products. And when its short-term borrowing costs are forced upwards

Oct 14, 2007 by John B | Posted in Renting & Real Estate

I heard that once you go over 4 units, the loan is considered a commercial loan and banks require adjustable rate mortgages and possibly more money down. Any input appreciated.

Typically 5 units + requires 10-15% down. If you occupy one of the units, you can still find 97% LTV.

Arms are more popular in commercial loans because of the cost, but you can find fixed rates with 30 or 40 yr amortization.

Jul 05, 2008 by mik d | Posted in Renting & Real Estate

Could there be a baloon payment with that type of home loan?

There could be a balloon, but not necessarily. That's just another factor to consider, like a "prepayment penalty".

The reason why people take Variable rates is fairly simple. The rate is initially "fixed", often