Aislinn Loder
speaker
55 appearances
2 recordings
1 series
first heard Feb 2019
last heard Mar 2019
Aislinn Loder’s voice in public audio — every appearance, attributed to the second.
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Appearances
The good thing about housing loans, this type anyway, these aren't the no-doc loans that triggered the financial crisis.
These are investment-grade mortgages made to creditworthy borrowers.
They're agency-backed.
So it's relatively safe, but it's also offering a pretty decent yield at a low duration.
And the duration means you're not as exposed if interest rates do start to rise again.
That's right.
Duration, basically, the longer the duration, the more vulnerable you are to losses when interest rates rise.
You're more vulnerable.
It's not that you're not vulnerable at all with four years duration.
It's that you're less vulnerable than a product that has eight or 10 years duration.
Exactly.
And these are yielding over 3%, these mortgage-backed securities ETFs.
They're yielding over 3% with a four-year duration and got really popular basically when people were first looking for what do I do after December's market crisis?
How do I bulletproof my portfolio a little bit against more market turbulence?
And also, how do I keep from exposing myself to rising rates?
And part of what made this particular ETF so popular was you really see the inflow surge after the Federal Reserve basically said, we're going to pause interest rate increases for the time being.
To be clear, the mortgages are agency-backed.
They're backed by Fannie Mae and Freddie Mac.
So you're not taking the risk that you're going to have a whole bunch of subprime defaults because these aren't those kinds of mortgages.
These are typically fixed rate, 15 to 30-year, borrowers with high credit scores, investment grade.
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