​Forward Starting Advance

Federal Home Loan Bank of Boston’s Forward Starting Advance is a flexible funding option that helps meet your future liquidity needs.  

The Forward Starting Advance is a fixed-rate advance, with the rate determined by the current level of interest rates. But unlike other advances, the disbursement of funds doesn’t happen until up to two years later. 

Because the disbursement is delayed, this advance allows members who may be sitting on excess liquidity to benefit in the future from current low rates and tight advance spreads.  

This advance is useful in managing anticipated deposit runoff, accelerating loan growth, replacement of maturing liabilities and a steepening yield curve.  

To illustrate this point, consider this example: You want to fund with an intermediate term advance but prefer to delay the disbursement because you have elevated amounts of liquidity right now. 

Instead of choosing an 18-month Classic Advance at 0.39% or a 24-month Classic Advance at 0.51%, you elect to use a Forward Starting Advance with a funding delay of six months and an 18-month maturity priced at 0.42%. 

During the delay period, you do not need to purchase activity stock or use up available collateral. At the six-month mark, the proceeds are disbursed as an 18-month Classic Advance at the pre-determined rate of 0.42%. 

You can see that this advance could be valuable when rates are rising, spreads are widening, or liquidity conditions are declining.  

The Forward Starting Advance is highly customizable because you can tailor the delay period and maturity to meet your liquidity and interest-rate risk needs.  It can also be structured as a bullet or amortizing advance, and it can be used in tandem with discounted Community Development Advances. 

Our strategies and solutions team can help you identify the funding solutions that best fit the unique needs of your balance sheet in any interest rate environment.  

Visit fhlbboston.com or call us at 1.800.357.3452.  

Federal Home Loan Bank of Boston
​Strategic Partnerships. Reliable Funding.