4 Interest rate spread Suppose that North hank nrrently charges n 3.5% fixed interest rate nn 15 -year mortgage and pays a 2.5% interest rate tn rzistomers who buy 6 month CDs. Suppose that at the cnd of the six month period depositors roll over the funds n the CD for another sx months. Then the interest ratc sprcad is Suppose now that market interest rates ncrease by 0.44This means that North bank has to pay a mature, while chargn interest rate on CDs when they qinterest rate on the 15-year mortgages. What wll happen to the interest rate spread? () t becomes equal to 2.9% and the North bank's nterest ncome nses. O It decreeses to 0.6% and the North bank's nterest income falls. O Tt decreases ta 0.6% and the North bank's interest incom rises. 0 It increases to 2.5% and the North bank's nterest income rises