Money managers showed on Tuesday the benefits of non-agency mortgage bank loans and securities with the basis that expectations in housing prices rally and interest rates increase.
Non-agency mortgage yields (mortgage securities without guarantee from their respective governments) are predicted to rise by at least 5 percentage points as prices in housing trend upwards, said investors at the Morningstar Investment Conference held in Chicago.
Curtis Mewbourne, managing director of PIMCO New York's head of portfolio, said that they are "a good entry point." He continued to explain that yields on these non-agency mortgages have the possibility to expand up to 5 percentage points in addition to the regular 5 to 6 percent, since the housing market of the United States is improving.
In 2012, Wall Street firms issued non-agency mortgages before the financial crisis. They were among the best performing bonds due to a search for yield by investment institutions and a low number of mortgages degrading to defaults.
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