Mortgage Backed Securities in simple terms are pools of mortgages (generally rated) that the banks sell off to private investors (like bonds), others move via the Fed.
These are the people who provide you with liquidity to buy your home. The banks from whom you receive your loan, turn around and sell (not all the time) these pools of mortgages to the secondary market (this includes Mortgage Backed Securities) . Why do banks do this? Because these investors buy your mortgage (pooled) and that money allows the bank to turn around and loan more money out, increasing their profits.
MBS investors get paid via interest from the monthly payments you make on your mortgage (some are annual). It's a very profitable way to earn income.
They provide liquidity to the market.
USMRI (US Mortgage Refinancing Index) covers mortgage refinancing and gives us a picture of refinancing in general.
USMRI is dumping as less and less people can afford to refinance as rates move up. Those who own variable rates are more than likely getting hammered right now, especially as the cost of living rises due to inflation and supply issues. It's a double whammy.
Investors in MBS will want to begin selling off as inflation roars ahead and it gets harder and harder for you to pay your mortgage. This is the risk MBS investors face. If you can't pay, they don't get paid.
Now I can't remember if these are insured or not by the feds but regardless.
Both USMRI and MBS are now below 2008 levels which is very interesting.
Keep in mind, margin debt (borrowed money in the markets) is now twice the amount it was in 2008 and that I believe in adjusted for inflation. So it's pretty wild what's happening out there.
Keep a very close eye on your wealth.
Depends on each individual or groups finances. If you can afford to buy a home and have security in your employment, can lock a great interest rate or better yet, buy cash, then ya, it is,
Soon, this will turn to a renters market. People won't be able to buy so they'll rent. We're talking people who were qualified just last year but won't be now or simply can't afford the increased rates.
On the other hand, the housing bubble could burst and prices could tank. You also have to take into consideration the cost of living increase.
It really depends on your finances, job, health etc.
I have a buddy who is a garbage man. He is secure in his job. Bought a second house he rents out and is nearly done his mortgage on the first home, less than a year away. He's in a very nice situation regardless of where this economy goes.
Lots of people think the collapse is like world ending but financially if you play your cards right you can remove yourself from poverty/middle class and create generational wealth.