Facilitates balance sheet restructuring and reduces interest rate risk
exposure by lengthening liabilities
·
A competitive substitute for deposits, assisting in the stabilization or
reduction of interest rate risk
·
Useful for financing mortgage portfolios (via strips of differing maturities)
Rate
Fixed for entire term to maturity
Accrual Basis
Actual / Actual day basis
Interest is Paid
Monthly
Principal is Paid
At maturity for non-amortizing advances; with straight-line
amortizing fixed rate advances, regular principal payments are made at the specified
intervals (i.e., monthly, quarterly, semi-annually, etc.); an ending period partial balloon payment
is also optional
Principal Prepayment Policy
Prepayable subject to a prepayment fee (equal to the present
value of 100% of the lost cash flow to the Bank, given the difference between the contract rate of the advance
and the current yield on FHLBank securities of the same remaining maturity-for amortizing advances, the difference
between the current yield on FHLBank securities of the same remaining effective weighted avg. maturity discounted
at the current yield)
Submission of Application
A Regular Fixed Rate Advance application is required for each borrowing
