When banks decide to adopt a loan hedging product the initial management strategy is to reserve it as a defensive tool only. Typically bankers decide to adopt a swap program because borrowers demand longer fixed rates, competition is willing to accommodate such structures (often with a swapped solution) and extending loan duration in a rising interest rate cycle does not make sense for prudent ALM purposes.
Tag: Loan Competition
We offer free lender training to banks that want to improve their marketing, customer service and loan profitability. One of the things we teach is how to go after the huge refinancing wave that is taking place in securitized commercial properties. If you remembered back in 2006, the securitization market hit its high in volume, and many of these deals were 10-year fixed rate transactions that all come due in 2016.