People vs Banks

[Charles Brown <cbrown@xxxxxxxxxxxxxxxxx>]

hmm, sounds expensive.

nothing preventing you from doing this in principle, but if you were going
to run a mortgage bank on these principles you'd need to square the other
side of the book away by finding some depositors who didn't mind a similar
schedule of repayments being applied to their deposits.  I'm not saying it
couldn't be done, but they would most likely demand a significantly higher
rate of interest to compensate them for the fact that it wasn't compounding
at the same rate and this might be high enough to nullify the initial
advantage.

best,
Dd

^^^^

CB: Thanks for the response, dd.

Let me try to follow what you say. The depositors are lenders to the bank ?
They lend at a certain rate of interest ? Wouldn't it be true that if a
greater proportion is attributed to principle of the monthly payment to the
bank from the mortgagor, and a greater proportion of the banks' payments to
the depositors is proportioned to principle over interest, then the
depositors would be paid off faster and the term that interest would be paid
out would be shorter and the total amount of interest due the depositors
would be less ?


In other words, isn't the same thing true of the depositors in relation to
the bank , as the bank in relation to the depositor ?