Mortgage Investors Flock to Specified Pools as Rates Drop
- Fannie Mae 30-year prepayment speeds rose 29% in July
- At current rates majority of borrowers have incentive to refi
Photographer: SeongJoon Cho/Bloomberg
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Investors will likely continue to look for ways to protect their mortgage-backed security portfolios as rates drop to their lowest level since November 2016. Buying specified pools is a popular way to do so.
Specified pools are bonds created using borrower characteristics such as credit scores, loan size or geographic distribution, designed to provide more certainty on when the underlying mortgages will be paid off.