About this document

IO/PO Mortgage-Backed Securities Overview by Dimitri Delis is a document available to read on EtoBox.

This document discusses interest-only (IO) and principal-only (PO) mortgage-backed securities. IOs receive interest payments and POs receive principal payments from underlying mortgage pass-throughs. IO prices are very sensitive to prepayment speeds, as faster prepayments reduce interest payments, while PO prices benefit from faster prepayments. Investors use IOs and POs to take positions on or hedge prepayment risk. The market for stripped IOs and POs structured into trusts is an active part of the agency

Author

Dimitri Delis

Language

EN