Schwab reports US$19.4 billion unrealized losses (pre-tax) on US mortgage securities held under held-to-maturity accounting. Plus US$11.8 billion unrealized losses on available-for-sale portfolio. Compares to US$28.3 billion common equity & US$9.7 billion average tangible equity. "The low yield on HTM bond portfolios could weigh on the returns at Schwab and many banks for years". "Schwab’s deposit base fell 30% in the past year to US$291 billion".
Bank of Canada "ultra-low interest rates may not return"
Portugal approves 30% cut in mortgage rates for struggling borrowers
“Portugal's government said on Thursday that banks must discount the benchmark six-month Euribor rate by 30% when calculating mortgage interest rates if asked to do so by borrowers struggling to deal with rising interest rates and avoid default. Around 90% of Portugal's stock of 1.4 million mortgages have variable rates indexed to euro interbank offered rates (Euribor) , one of the highest levels in the euro zone.”
Borrowers at TD, BMO, CIBC see their mortgages balloon due to sharp rise in interest rates
Fitch downgrades US credit rating from AAA to AA+
Swiss National Bank hit by $15 billion second quarter loss
First Republic is seized and bulk sold to JP Morgan
First Republic Bank, recently US$233bn assets, seized by FDIC & sold to JP Morgan. US$13bn loss to FDIC on off-market loans. "It was a run on the business model" of reliance on high-service, low-rate deposits to fund low-rate loans.
Following large, rapid deposit withdrawals then subsequent wholesale funding had materially higher cost than legacy deposits.
At current interest rates, loan portfolio included large unrealized losses due to their origination at historically lower interest rates