Write a short briefing report to the senior management team of your financial institution (not to exceed 1,500 words). You work for a building society (i.e. mortgage bank/company) and you want to offer a 10 year fixed rate mortgage at a rate of 2.5%.
Your main business is to take short term deposits from retail investors and to offer mortgages. Carefully explain to a new non-executive director how you would hedge the risk of offering such a low fixed rate mortgage. Also outline to the non-executive director how you would calculate the fixed rate mortgage rates which you consider offering.