Mortgage Bonds Least Likely to Refinance Rally: Credit Markets
This article is for subscribers only.
Investors in U.S.-backed mortgage bonds are shifting into securities tied to debt from homeowners who are the least willing or able to refinance as the Federal Reserve helps keep interest rates near record lows.
Fannie Mae-guaranteed securities with 5.5 percent coupons that are backed by 30-year mortgages with average balances of less than $85,000 have jumped to 2.4 cents on the dollar more than similar generic debt, according to FTN Financial. The gap has more than doubled from 1.1 cents in late July.