In November 2021, I refinanced the mortgage on our Hawaii house. We locked in a 1.99% interest rate on the remaining principal (~$590k) for 30 years.
Fast forward to today, and Republic First bank has gone gone into receivership. Why? Because in 2021, "Previous leadership invest[ed] heavily in long-duration securities with low fixed interest rates." As interest rates have risen since then, those securities have declined in value.
Then, in 2022, Republic First "grew [its] jumbo mortgage portfolio at below-market interest rates." Although our refinance was through a different lender, that very well describes what we did to the bank we refinanced with. We locked got a fixed, jumbo mortgage at what is now a below market rate. Not just below market, but below the current inflation rate.
Whether or not that situation is widespread, or if it represents a serious threat to the banking industry, only time will tell. Regardless, it represents one of the few time, to paraphrase Danny Ocean, when I've had the perfect hand, and I've bet big, and taken the house.
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