I have a 2.25% 30-year mortgage. I don’t really understand who funds/invests in mortgage debt. I was wondering what happens to low interest mortgage debt when the FED rate is much higher than my mortgage interest. Do investors get stuck holding the bag for 30-years?
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FYI Fed is short for federal reserve bank. You don’t need to capitalize all the letters because it isn’t an acronym.
Anyways, someone owns your debt. Either the bank is still collecting your payments, or they’ve sold your debt to someone else who is collecting your payments. They had to price in the fact that rates could change when they bought your debt. Your payments are still an asset on their balance sheet, they’re just at a lower interest rate than they could be making off of someone else.
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