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.