Amid signals that the interest-rate cycle may shift, certain funding solutions can present value in managing liquidity, earnings, and interest-rate risk.
As the prospect of rates being “higher for longer” continues to pick up steam, the Member-Option Advance can be a useful tool to hedge interest-rate risk while maintaining the flexibility to adapt if necessary.
FHLBank Boston’s Mortgage Parternship Finance® (MPF®) 35 product has sharpened its pricing and value proposition at a time when the mortgage business is experiencing challenges due to higher interest rates. Due to some of the nuances of how the product is structured and how prices and price adjustments are made, different opportunities exist for Participating Financial Institutions (PFIs), members participating in the MPF Program, to create more value out of their mortgage activity. In times of constrained liquidity or robust refinancing, the MPF Program could be an attractive arrow in a PFI’s quiver.
With uncertainty surrounding the near-term path of interest rates, several funding strategies can be used to benefit from the changes in the yield curve.
Knowing the essentials of how the lendable value of loan collateral at FHLBank Boston is calculated can allow members to optimize their balance sheet and better manage liquidity risk across different environments. In the first of a two-part examination of this important determination, the essentials of calculating lendable value are explored.
The extraordinary events of March 2023 have brought liquidity risk into the limelight. FHLBank Boston has multiple solutions to support members in meeting their funding, liquidity, and risk-management needs.
In an environment with higher interest rates than have been observed in almost a generation, FHLBank Boston dividends are an important consideration when evaluating funding options and prices. Dividends reduce effective borrowing costs and unlike other alternative funding providers, there are no other basis point fees that would increase the net borrowing cost. Ignoring these subtleties could be costly to your institution.
Declining tangible equity could impact a depository’s credit status category at FHLBank Boston through legacy regulation. As of December 9, 2022, FHLBank Boston policies dependent on specific tangible equity ratios were changed to no longer automatically affect a member’s credit status category. Borrowing restrictions for any institution with negative tangible equity remain.
Our Annual and Advisory Council Reports highlight how the Bank innovated to help our members with their liquidity and housing and community development needs throughout 2024.
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