Question
Consider a fixed-rate mortgage loan of $250,000, given today, at the mortgage rate of 4% per annum, compounded semiannually. The amortization period is 20 years
Consider a fixed-rate mortgage loan of $250,000, given today, at the mortgage rate of 4% per annum, compounded semiannually. The amortization period is 20 years and mortgage payments will be made monthly. Suppose the lending bank has raised its own funds by 1-year term deposits on which it will pay 1.2% interest per annum, compounded monthly. After one year from today, the deposit rate on 1-year term deposits is expected to rise to 4.8% per annum, compounded monthly.?
Calculate the net interest income of the bank from the mortgage loan in the first month of the first year.
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