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Financial Intelligence

Amortizing Advances

Some members elect to sell long-term, fixed-rate residential mortgages to the secondary market rather than confront the interest rate risk associated with these loans. Forgoing the spread associated with residential mortgages could be a missed opportunity for financial institutions. One option available to members is using a FHLBNY Amortizing Advance to match-fund residential mortgage production, which aids in mitigating interest rate risk and preserving spread. Members may book Amortizing Advances structured to match the anticipated average life of the underlying mortgage portfolio. Amortizing Advances can be structured in a variety of ways with your choice of final maturity (5 to 30 years) and amortization schedules (full amortization or balloon options). Advances can be crafted to specifically match the terms of a particular transaction or an entire mortgage pool. This will enable a member to lock in a spread for a period of time with the advance extinguishing according to the average life of the mortgage or mortgage pool.

Features of the Amortizing Advance:

  • Fixed monthly payments, comprised of principal and interest
  • Interest payments due the first business day each month
  • Interest calculated on a 30/360-day basis
  • Forward starting capabilities, like many other advance products
  • Maturities available out to 30 years, but shorter maturities than the amortization term are also available with a balloon payment, due at maturity
  • Prepayable – members can build the prepayment language into their loan covenants to protect against prepayment risk (prepayment language can be found in the FHLBNY’s Member Products Guide)
  • The Amortizing Advance structure is also available under the Community Lending Programs for a significant savings if eligibility criteria are met

Disclaimer: Notwithstanding any language to the contrary, nothing contained in these disclosures is intended to constitute an offer, inducement, promise, or contract of any kind. Any product descriptions and pricing may be subject to change without notice.

The content provided in these disclosures is presented as a courtesy to be used only for informational purposes and is not represented to be error free. The FHLBNY makes no representations or warranties of any kind with respect to the content contained herein, such representations and warranties being expressly disclaimed. The FHLBNY is not a financial or investment advisor.

Moreover, the FHLBNY does not represent or warrant that the content of these disclosures is accurate, complete or current for any specific or particular purpose or application. It is not intended to provide nor should anyone consider that it provides legal, accounting, tax or other advice. Such advice should only be rendered in reference to the particular facts and circumstances appropriate to each situation. The FHLBNY encourages you to contact appropriate professional(s) and consultant(s) to assess your specific needs and circumstances and to render such advice accordingly. In addition, the FHLBNY is not endorsing or recommending the use of the means or methods contained in or through these disclosures for any special or particular purpose.

It is solely your responsibility to evaluate the risks or merits of any funding or investment strategy. In no event will FHLBNY or any of its officers, directors or employees be liable for any damages — whether direct, indirect, special, general, consequential, for alleged lost profits, or otherwise – that might result from any use of or reliance on these materials.

Key Contacts

Relationship Managers:
(212) 441-6700
Member Services Desk:
(212) 441-6600 or
(800) 546-5101, option 1


[email protected]