Mortgage Backed Securities Chart: A Guide to 2023's Top 50 MBS Issuers

Mortgage-backed securities (MBS) are a type of fixed-income investment that is backed by a pool of mortgages. MBS are often issued by government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac, and they are typically sold to investors in the form of bonds. MBS can be a good investment for those who are looking for a steady stream of income, and they can also be used to diversify a portfolio.

How MBS Work

MBS are created when a group of mortgages is pooled together and then sold to investors in the form of bonds. The bonds are typically divided into different tranches, each with its own maturity date and interest rate. Investors can choose to purchase bonds from different tranches depending on their investment goals.

The interest payments on MBS are made from the principal and interest payments that are made on the underlying mortgages. If a mortgage in the pool defaults, the investors in the MBS will still receive their interest payments, but they may not receive the full amount of their principal investment back.

Types of MBS

There are two main types of MBS:

• Pass-through securities: Pass-through securities are the most common type of MBS. They represent a direct interest in a pool of mortgages, and the investors in these securities receive a pro rata share of the principal and interest payments that are made on the underlying mortgages.
• Collateralized mortgage obligations (CMOs): CMOs are more complex than pass-through securities, and they are typically used by investors who are looking for a higher yield. CMOs are created by dividing a pool of mortgages into different tranches, each with its own maturity date and interest rate. Investors can choose to purchase bonds from different tranches depending on their investment goals.

Benefits of Investing in MBS

There are several benefits to investing in MBS, including:

• Steady income: MBS provide investors with a steady stream of income from the interest payments that are made on the underlying mortgages.
• Diversification: MBS can be used to diversify a portfolio because they are not correlated to the returns on other asset classes, such as stocks and bonds.
• Safety: MBS are backed by a pool of mortgages, which makes them a relatively safe investment.

Risks of Investing in MBS

There are also some risks associated with investing in MBS, including:

• Default risk: The risk that one or more of the mortgages in the pool will default and that the investors in the MBS will not receive the full amount of their principal investment back.
• Interest rate risk: The risk that interest rates will rise and that the value of the MBS will decline.
• Prepayment risk: The risk that the mortgages in the pool will be prepaid early and that the investors in the MBS will not receive the full amount of their principal investment back.

Tips for Investing in MBS

Here are some tips for investing in MBS:

• Do your research. Before you invest in MBS, be sure to do your research and understand the risks involved.
• Consider your investment goals. When choosing MBS to invest in, consider your investment goals and time horizon.
• Diversify your investments. Don't put all of your eggs in one basket. Diversify your investments by investing in a variety of MBS with different maturities and interest rates.
• Monitor your investments. Once you've invested in MBS, be sure to monitor your investments regularly. This will help you identify any potential problems early on.

Why MBS Matter

MBS are an important part of the financial system. They provide investors with a steady stream of income, and they help to make mortgages more affordable for borrowers. MBS also play a role in the economy by providing liquidity to the housing market.

Conclusion

MBS can be a good investment for those who are looking for a steady stream of income and who are willing to take on some risk. However, it is important to do your research and understand the risks involved before investing in MBS.

Top 50 MBS Issuers

The following table lists the top 50 MBS issuers in the United States as of December 2022.

MBS Issuance Volume

The following table shows the MBS issuance volume in the United States from 2017 to 2022.

MBS Prepayment Rates

The following table shows the MBS prepayment rates in the United States from 2017 to 2022.

Common Mistakes to Avoid When Investing in MBS

Here are some common mistakes that investors should avoid when investing in MBS:

• Investing too much in MBS. MBS can be a good investment, but they should not make up more than a small portion of your overall portfolio.
• Not understanding the risks of MBS. Before you invest in MBS, be sure to do your research and understand the risks involved.
• Ignoring prepayment risk. Prepayment risk is the risk that the mortgages in the pool will be prepaid early, which can reduce the value of the MBS.
• Chasing yield. Don't be tempted to buy MBS with a high yield without understanding the risks involved.
• Buying MBS with a long maturity. MBS with a long maturity will be more sensitive to changes in interest rates than MBS with a shorter maturity.

Tips for Investing in MBS

Here are some tips for investing in MBS:

• Start slowly. Don't invest too much money in MBS until you understand the risks involved.
• Diversify your investments. Don't put all of your eggs in one basket. Diversify your investments by investing in a variety of MBS with different maturities and interest rates.
• Use a qualified advisor. If you're not familiar with MBS, you might want to consider using a qualified advisor.
• Monitor your investments. Once you've invested in MBS, be sure to monitor your investments regularly. This will help you identify any potential problems early on.

Conclusion

MBS can be a good investment for those who are looking for a steady stream of income and who are willing to take on some risk. However, it is important to do your research and understand the risks involved before investing in MBS.