## Why do MBS have different yields than bonds?

## How are MBS prices expressed?

**MBS**prices can be expressed as a function of a small number of interest rate factors.**MBS**prices are expressed as a function of these factors plus a pricing error term. The error term allows for the fact that model prices based on any small number of pricing factors will not be identical to quoted market prices.

## Where can I find the latest information on the MBS?

**MBS**Online contains the latest**MBS**information and is updated as changes to the**MBS**occur. Information on how the Australian Government is monitoring and responding to the Coronavirus (COVID-19) pandemic is available on the Health Coronavirus (COVID-19) webpage.

## What are the risks of investing in MBSs?

- This is the risk investors take when borrowers decide to pay the principal on their mortgages ahead of schedule. The result, for investors in MBSs, is an early return of principal; or, there could be a reduction in interest income if the borrower makes larger payments to pay the mortgage down more quickly.

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