Pipeline risk: Difference between revisions

From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson
(Expand. Source: linked pages.)
imported>Doug Williamson
(Link with Pipeline page.)
 
Line 24: Line 24:
* [[Liquidity risk]]
* [[Liquidity risk]]
* [[Mortgage]]
* [[Mortgage]]
* [[Pipeline]]
* [[Prepayment risk]]
* [[Prepayment risk]]
* [[Reputational risk]]
* [[Reputational risk]]


[[Category:Manage_risks]]
[[Category:Manage_risks]]

Latest revision as of 20:55, 21 August 2017

1. Interest rate risk.

Pipeline risk is a form of interest rate risk for a financial institution.

It arises from making advertisements for fixed interest rate products, for example mortgage loans or deposits.

Whilst neither the financial institution nor the customer is contractually committed, the financial institution may consider its advertisement to be binding for reputational or other reasons.


The financial institution therefore has an interest rate exposure for the - as yet unknown - takeup of its advertised fixed interest rate product.


2. Liquidity risk.

In relation to liability products such as mortgages, pipeline risk also presents a liquidity risk.

The - as yet unknown - number of mortgage loans will need to be funded.


See also