Vintage

Reviewed by Sujaini | Updated on Sep 30, 2020

What is Vintage?

Vintage is a slang term used by mortgage-backed security (MBS) traders and investors to refer to a seasoned MBS for a certain period of time. An MBS usually has a maturity of about 30 years, and the "vintage" of a specific problem exposes the investor to less risk of prepayment and default, although this reduced risk often restricts price appreciation.

Many vintage MBS underlying loans have unique features, such as burnout, which make the vintage trade at a premium price. These special features derive from the manner in which underlying assets are pooled in MBS. The underlying assets of MBS are typically clustered around several geographic areas with identical maturity and interest terms.

Breaking Down Vintage

Vintage is a slang term used by mortgage-backed security (MBS) traders and investors to refer to a seasoned MBS for a certain period of time. An MBS usually has a maturity of about 30 years, and the "vintage" of a specific problem exposes the investor to less risk of prepayment and default, although this reduced risk often restricts price appreciation.

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