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new type of security economist suntribune january 13 1988 c13 mortgages can be investments most people understand the concept of mortgages from the borrowing side but its impor tant also to know about mort gages as an investment in the 70s the first of many types of investments was cre ated in the united states giving individual investors the oppor tunity to participate in the re latively high yield of home mortgages the 80s have seen an explosion of additional secur ities to capitalize on the growth and further development of the mortgage market and the in troduction of these securities to canada this new category of invest ments is called descriptively enough mortgagebacked securities mbs in the us mortgagebacked securities are the fastest grow ing segment of the fixedincome marketplace currently encom passing about 550 billion or ab out onethird of all existing re sidential mortgages in canada more than 500 million worth of these securities were issued in 1987 the first year of the markets existence canada surpassed the amer ican firstyear experience by over 50 m illion oneofthemain reasons for the growing popu larity of the mbs is the active secondary market that en hances the liquidity of the in vestment another feature of mbss is their high yield they typically earn as much as or greater than gics of comparable maturities mortgagebacked securities are among the safest of all in vestments in order to qualify an underlying mortgage must be a high quality first- residential mortgage the securities are insured by the government of canada through canada mortgage and housing corporation for the full amount of principal and interest as well as timely payment this insurance compares favorably with the 60000 maximum in surance on gics provided by the canada deposit insurance corporation in addition the timely pay ment guarantee ensures that your payment is received on the 15th day of each month regard less of whether the mortgagors have made their individual pay ments mbss are undivided interests in governmentinsured first re sidential mortgages this means that you as an investor are buying into a pool of perhaps 100 mortgages the payments you receive are made up of in- imstwft family touit corporation guaranteed investment certificates 10 0 5 year term 30 days to 5 year rates available on request 2944405 ext 317 or 318 rates subject to change member canada deposit insurance corporation terest principal and prepay ments there is no fixed sum or for mula to tell you how much of the principal is paid back to you in each blended monthly payment much will depend on the actions of the underlying mortgagors as a rough guide think to the first years of your own mort gage and in particular to the amount of principal paid off in your monthly payments at that time because you are buying into a pool that could have over 100 mortgages in it however it is possible that in any given month one mortgagor could for what ever reason elect to either pre pay part or all of his mortgage according to the prepayment and liquidation terms offered by the issuer all prepaid principal is immediately returned on a prorata basis to the investors in the next monthly payment to date mbss in canada have been issued in 5 and 20 year terms the minimum de nomination available is 5000 wilii multiples of 5000 thereaf ter at mcleod young weir we speak of mortgagebacked securities as a partnership be tween the investor and the canadian homeowner inves tors make more money avail able for homeowners to borrow while strengthening nearly any investment portfolio with some of the safest securities avail able announcing the canadaus deal you can profit 6am right now nationaltfoists new toprateus dollar account our new us dollar account lets you work and travel freely in north america its an investment and savings account that has chequing privileges plus it allows you to earn more money and derive more benefits than any other us dollar account amount rate additional benefits 25000 plus 675 no service charge free personal cheques no tec travellers cheques 10000 0499999 625 no service charge free personal cheques 3000- 999999 575 01 299999 525 earn interest on every dollar unlike some other similar accounts our us dollar account pays you the higher rate of interest on every single dollar you invest for a great canadaus deal come to national trust today and start profiting right now m fcsatsoimal trust pr a national victoria and grey trustco company markhammarkville shopping centre 4793544 rates subject to change note this is not an insured deposit by the canadian deposit insurance corporation act