The Importance of Adding the Right Assets in Today?s Environment

In September of 2021, the 10-year treasury sat just over 1.50% and mortgage rates were in the 3% range for many borrowers. Housing prices were soaring and financial depositories across the country were dealing with margin compression as investment options felt limited with interest rates hovering around all-time lows. Institutions grappled with challenges on pricing loans that may hang around for a longer period than expected as borrowers may seek to hold onto their low mortgage rates for as long as they can. Shorter duration assets like auto loans were being priced aggressively to generate some form of spread over the risk-free rate and generate profits. Fast-forward one year to a very different environment. Interest rates are substantially higher, and many assets originated last year...

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