|
|
Article: Turning pitfalls into opportunities. (mortgage-backed securities)
- Article from:
- Mortgage Banking
- Article date:
- April 1, 1994
- Author:
CopyrightCOPYRIGHT 1994 Mortgage Bankers Association of America. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
|
Last year was an unusually rough year for investors in mortgage-backed securities. Runaway prepayments wreaked havoc on the average lifespan of the pools backing these securities. But the pitfalls of 1993 may have created the opportunities of 1994 for MBS investors.
MORTGAGE-BACKED SECURITIES HAVE ENJOYED A reputation for being high yielding, liquid and safe. But last year mortgage-backed securities produced a total return almost 400 basis points less than that of composite Treasury securities with one-year or longer maturities. Needless to say, this performance greatly disappointed mortgage investors.
What went wrong? Is the high-yielding aspect of mortgage ...