Silicon Valley Bank Closure: How it Could Impact Your Clients' Mortgage Rates

As a trusted mortgage partner, we at Diamond Residential Mortgage Corporation (DRMC) strive to stay ahead of industry news that could impact our partners and clients.

We wanted to take time today to discuss the recent collapse of Silicon Valley Bank (SVB) that sent shockwaves throughout the financial sector and address the potential impact on interest rates, particularly for our valued realtor partners.

The collapse of SVB, which had approximately $209 billion in total assets and about $175 billion in total deposits, has raised concerns about the financial system's stability. In response, US authorities took extraordinary measures to shore up confidence in the system, introducing a new backstop for banks that Federal Reserve officials said was big enough to protect the entire nation’s deposits.

First and foremost, it's important to note that the FDIC has stated it will resolve SVB in a way that “fully protects all depositors.” Similarly, “all depositors” at Signature Bank, which also collapsed recently, will be made whole. This means that customers of these banks will not lose their deposits, which should provide some reassurance to the public.

Furthermore, the Federal Reserve has announced a new “Bank Term Funding Program” that offers one-year loans to banks under more accessible terms than it typically provides. This program may reduce the pressure on banks to generate cash by selling securities whose prices have tumbled.

While these measures may have helped soothe investors' worries about additional bank runs or the risk that a new financial crisis would trigger a recession, the potential impact on the mortgage industry is still undermined.

Sudden events in the financial sector, like the closure of SVB, can significantly impact interest rates - especially if they lead to lenders being more risk-averse. In response to the closures of Silicon Valley Bank, the shuttering of Signature Bank out of New York, and the continued rate increases the Federal Reserve is implementing to fight inflation; we expect to see a degree of market fluctuation in the coming days and weeks.

At DRMC, we understand that news like this can be unsettling, but we want to reassure our real estate partners that we are here to help you navigate these times and better serve your clients. Our Loan Officers have the expertise and resources to help you and your clients make informed decisions about their financial future.

We remain committed to providing the tools, resources, and expertise you need to help your clients achieve their homeownership goals. If you have any questions or concerns about how recent events may impact the mortgage industry or interest rates in your local market, we encourage you to contact your local DRMC Loan Officer.

Together, we can navigate these challenging times and continue to help our clients achieve their dreams of homeownership.

Together, We Get It Done.

About Diamond Residential Mortgage Corporation:

Diamond Residential Mortgage Corporation is a mortgage lender with corporate headquarters in Lake Forest, Illinois, licensed to originate and service mortgage loans in 21 states. DRMC is approved to originate FHA, VA, USDA, and conventional mortgage loans and several mortgage loan products offered by private investors. It is an approved Freddie Mac and Fannie Mae Seller/Servicer and Ginnie Mae Issuer. Founded in 2009 by Paul Diamond, DRMC has since expanded to over 30 branch locations across the United States. DRMC is not affiliated with or acting on behalf of or at the direction of any governmental body or agency. DRMC is an Equal Housing Opportunity lender, NMLS #186805, NMLS Consumer Access.

For more information, visit https://diamondresidential.com/.