Furniture finance: Fitch says banks can’t make the big loan to banks
Fitch Ratings said it could not determine whether banks can make big loans to the big four banks that manage mortgage-backed securities (MBS), which is an important component of the housing market.
“The big four have the largest deposits and the biggest lending,” said Nick Pomerleau, an analyst at Fitch.
“That means they can make the largest loans to banks, but not necessarily the largest interest rate loans.”
The ratings agency said Fitch would raise the ratings of those banks in a future rating update.
Fitch, however, did not say how much of a downgrade the banks might face, or whether Fitch could raise their ratings to AAA, or worse.
The rating agencies said FBS will still be rated AAA.
Fitch said that the banks would still have the ability to use the federal funds rate, which is a rate of return that banks pay to borrow money, to borrow.
MBS are mortgages backed by real estate assets, including buildings, homes and businesses. For more: https://twitter.com/fintechinvesting/status/75282905879383785