Mortgage Bond

Posted in Finance, Accounting and Economics Terms, Total Reads: 1311

Definition: Mortgage Bond

A mortgage bond is a bond that is backed by a physical asset, property etc. It is considered to be a very safe bond because the monetary value of the physical properties do not fluctuates on a day to day basis.

For example: A bank X sells the mortgage security that they had in return of the loans given to the public to a bond agency to secure their loans from defaults, the agency will then sells the bond to the public to raise the money. The bonds have interest rate varying from 6% to 10% generally.

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