In the OP’s first model the mortgage would be amortizing as well as in your own situation may debt are IO. The “amortization try negligible” comment is actually incorrect, it creates a giant improvement on ROE.

In the OP’s first model the mortgage would be amortizing as well as in your own situation may debt are IO. The “amortization try negligible” comment is actually incorrect, it creates a giant improvement on ROE.

The OP got negative arb regarding the credit YOC vs. worth of financial obligation (4.75per cent versus 5.77percent). Inside your model there is certainly good arb (YOC vs. price of personal debt) considering that the money happens to be IO. Read More In the OP’s first model the mortgage would be amortizing as well as in your own situation may debt are IO. The “amortization try negligible” comment is actually incorrect, it creates a giant improvement on ROE.