Could we soon see the return of MBS?

Could we soon see the return of MBS?

The failure of mortgage-backed securities nearly led to the collapse of the US banking system when the US housing bubble burst in 2008. Could the sector today be an income opportunity for investors? Annabelle Williams reports

US banks’ fondness for securitising mortgages during the 1990s was part of a chain of events which led to the sub-prime mortgage crisis of 2008, and ultimately brought the banking system to its knees. In the post-crisis years, banks have been forced to clean up their act. The main shift in the mortgage-backed securities sector since the crisis has been a reluctance among the banks to issue securities. Instead, three government-backed agencies have been responsible for around 95% of all post-crisis MBS issuance, explained Raymond McGarrigal, US non-agency mortgages specialist at J.P. Morg...