Is it true that the FHLBanks borrow short and lend long?
No – the FHLBanks primary function is to provide credit to members. These loans are fairly short in maturity (less than five years), so one effective way to fund these assets is through matching debt issuance. Over the years, this is how the FHLBanks became a well-known issuer on the short end of the curve. The FHLBanks issue some longer-term debt to fund mortgage assets held in portfolio, as would be expected. However, mortgage loans currently equal less than 7% of total FHLBank assets. Most debt issuance will continue to be inside of five years, although the FHLBanks will periodically tap the long end of the curve.
