Back to list
QUESTION DETAIL
Related User
Votes
What is the risk premium and how does it affect the rate to obtain a mortgage or other loan?
ANSWER
The BIDaWIZ Team's Answer:
A risk premium is commonly referred to as a credit spread in the debt markets. Specifically, it is the excess of the expected return of a risky asset in excess of a risk-free asset. As it relates to mortgages, it would be a 30 year mortgage interest rate less the 30 year treasury rate.
