All those comments re margins and deposit liquidity are true but there are protections against that for a prudent bank that hedges their portfolio properly and uses sufficient levels of wholesale funding to offset the depositor flight risk. However,this is more expensive than using retail deposits when rates are low and so some lenders choose not to buy them. That is when the risk crystallises as an issue when depositors take flight.
Source: award winning U.K. mortgage head for c. 30 years and member of Council Of Mortgage Lenders Executive Committee for ten years. Now the day job is getting these lenders out of the shit I warned them about.
Edit: clarity.
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