Match-Rate Funds

外汇网2021-06-19 20:56:03 109

When the interest rate on a loan matches (or is extremely close to) the interest rate on the source of the funds loaned out. An example of this would be if a bank accepted a $100,000 deposit and agreed to pay 5% interest on it for five years, then loaned the $100,000 out at 5.25%.

A securitization lender would be a typical user of match-rate funds.

|||Match-rate funds typically come with very high penalty fees for early ppayment because the intermediary has agreed to pay a specific interest rate to the depositor. If ppayment was not discouraged, the intermediary could end up paying interest after it had stopped receiving interest payments.

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