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FDIC Report Discusses Challenges Bank Mortgage Lenders May Face If Interest Rates Rise

FOR IMMEDIATE RELEASE
PR-47-2002 (4-25-2002)
Media Contacts:
Phil Battey (202) 898-6993

The profitability of the nation's residential mortgage lending specialists has become more exposed to the effects of a rising interest rate scenario that would compress net interest margins and suppress noninterest revenues associated with mortgage production and sales, according to a report released today by the Federal Deposit Insurance Corporation.

Unprecedented levels of refinancing spurred by low long-term interest rates have contributed to a significant lengthening of asset maturities.

The report concludes that the current interest rate environment gives institutions the opportunity to correct mismatches between their assets and liabilities.

The report was published as the latest edition of FYI. FYI is an email bulletin covering FDIC analysis of emerging issues in banking and the economy. FYI is available on the FDIC's Web site at www.fdic.gov, where those interested in receiving each issue electronically may subscribe. A copy of FYI is attached.

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Attachment: http://www.fdic.gov/bank/analytical/fyi/2002/042502fyi.html

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 9,613 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars-insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at www.fdic.gov or through the FDIC's Public Information Center (800-276-6003 or (703) 562-2200).


Last Updated 04/25/2002 communications@fdic.gov