Snapshots and Updates

More Bad News for Bank of America?

Lower mortgage rates are not good news for banks holding a lot of mortgage backed securities (such as Bank of America) because they’ll get paid back sooner, and the banks will have to reinvest at lower rates. And despite the decline in mortgage rates we’ve seen so far this year, they still haven’t fallen as fast as treasury yields, perhaps an ominous sign of more mortgage-related pain ahead.