MBS Returns In 2025 The Highest In A Decade (Excess Returns Highest Since 2011)

With all the breaking news about Maduro’s capture in Venezuela and the potential collapse of Iran’s Islamic government, I will provide some good news for investors about Mortgage-backed Securities (MBS).

Mortgage-backed securities (MBS) are capping off an exceptionally strong 2025 with further outperformance in December, beating the rest of the aggregate bond market on an excess return basis. Both total and excess returns for full year 2025 were the highest in more than a decade. MBS performance has been boosted by spread tightening as volatility declined and scarce net supply that was met with resilient demand, including renewed GSE and overseas buying.

Thanks to University of Chicago graduate Erica Adelberg.