The global Mortgage-Backed Security market is poised for robust growth, with its market size projected to reach XX million in 2033, driven by a CAGR of XX% during the forecast period 2025-2033. Key drivers fueling this growth include increasing demand for residential and commercial mortgages, government support for housing markets, and the ongoing trend of securitization. However, factors such as rising interest rates, economic uncertainties, and regulatory challenges may pose restraints to market expansion. The market is segmented into types (commercial MBS, residential MBS) and applications (commercial banks, real estate enterprises, trust plans). Residential MBS dominate the market due to the high demand for home loans. Prominent players in the market include Construction Bank, ICBC, and Bank of China, among others. North America and Asia Pacific are expected to be key regional markets, with the US, China, and India driving growth. The study period for this analysis is 2019-2033, with the base year being 2025 and the forecast period extending from 2025 to 2033. Mortgage-backed securities (MBS) are financial instruments that are backed by a pool of mortgages. They are typically issued by government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac, but can also be issued by private banks and investment firms. MBS offer investors a way to invest in the housing market without having to purchase a physical property.

MBS Market Outlook

The global mortgage-backed securities (MBS) market size was valued at approximately $2.5 trillion in 2023 and is projected to reach around $3.8 trillion by 2032, growing at a compound annual growth rate (CAGR) of 4.5%. This growth is driven by factors such as increasing demand for diversified investment products, the stability of real estate markets in key regions, and the rising involvement of government-sponsored entities in the securitization process.

One of the primary growth factors of the MBS market is the increasing demand for investment diversification. Investors are continually on the lookout for stable yet lucrative investment opportunities, and MBS provides a unique avenue by offering a relatively safer investment backed by real estate assets. The combination of regular income streams and the potential for capital appreciation makes MBS an attractive option for both institutional and retail investors. Furthermore, the growing sophistication of financial markets globally ensures better transparency and understanding of MBS products, thereby boosting investor confidence.

Another significant growth factor is the stability and growth of the real estate market, particularly in developed regions such as North America and Europe. As the real estate market continues to show robust growth, the underlying assets backing these securities become more valuable and stable, thus enhancing the attractiveness of MBS. Additionally, favorable regulatory frameworks in these regions have facilitated the smooth functioning and growth of the MBS market. Government regulations often play a pivotal role in providing the necessary safeguards and ensuring market stability, which in turn attracts more investors.

The increasing involvement of government-sponsored entities such as Fannie Mae, Freddie Mac, and Ginnie Mae in the United States has also significantly contributed to the growth of the MBS market. These entities not only provide a level of security and credibility but also ensure a steady supply of MBS products in the market. Their active participation helps in maintaining market liquidity and provides a safety net for investors, making the MBS market more resilient to economic downturns. Additionally, similar government-backed initiatives in other regions are expected to drive the market further in the coming years.

From a regional perspective, North America remains the largest market for MBS, driven primarily by the well-established real estate and financial markets in the United States. The presence of major market players and a favorable regulatory environment further solidify its leading position. Europe follows closely, with increasing investments in real estate and government initiatives to boost the financial markets. The Asia Pacific region is expected to witness the highest growth rate, owing to rapid urbanization, increasing disposable incomes, and favorable government policies aimed at boosting the housing sector. Latin America and the Middle East & Africa regions are also expected to show steady growth, driven by improving economic conditions and increasing investment activities.

Type Analysis

The MBS market can be segmented by type into Residential MBS (RMBS) and Commercial MBS (CMBS). Residential Mortgage-Backed Securities (RMBS) are typically backed by residential real estate properties. These securities are attractive to investors due to the low default rates associated with residential properties. The demand for RMBS is particularly high in regions with stable and growing residential real estate markets, such as North America and Europe. The growing trend of homeownership, along with favorable mortgage rates, has significantly contributed to the growth of the RMBS segment. Additionally, the increasing availability of data and analytics has improved the risk assessment associated with RMBS, making it a more attractive investment option.

Commercial Mortgage-Backed Securities (CMBS) are backed by commercial real estate properties, such as office buildings, shopping malls, and hotels. The performance of CMBS is closely tied to the health of the commercial real estate market. With the recovery of the global economy post the COVID-19 pandemic, the commercial real estate market has shown significant signs of recovery, thereby boosting the demand for CMBS. Investors are increasingly looking at CMBS as a means to diversify their portfolios, given the attractive yields and potential for capital appreciation. Moreover, the increasing trend of mixed-use developments and smart cities is expected to drive the demand for CMBS in the coming years.&

House Price Index MoM in the United States decreased to -0.10 percent in March from 0 percent in February of 2025. This dataset includes a chart with historical data for the United States FHFA House Price Index MoM.

Mortgage Backed Security Market Outlook

The global mortgage-backed security (MBS) market size was valued at approximately $2.1 trillion in 2023 and is projected to reach $3.5 trillion by 2032, growing at a CAGR of 5.5%. A key driver of this growth is the increasing demand for mortgage-backed securities due to their ability to provide liquidity and diversify investment portfolios. The growth is further stimulated by favorable government policies and increased homeownership rates, which collectively bolster the issuance of new MBS.

One of the primary growth factors for the MBS market is the low-interest-rate environment, which has persisted over recent years. This scenario has encouraged borrowing and refinancing activities, leading to a higher number of mortgages that can be securitized. Moreover, the stability and relatively lower risk associated with MBS compared to other investment vehicles make them an attractive option for institutional investors. Additionally, advancements in financial technology have streamlined the process of bundling and selling these securities, increasing market efficiency.

Another significant factor contributing to the expansion of the MBS market is the role of government-sponsored enterprises (GSEs) such as Fannie Mae, Freddie Mac, and Ginnie Mae. These GSEs guarantee a significant portion of the residential MBS, providing a safety net that minimizes risk for investors. The support from these entities ensures a continuous and reliable flow of investment into the housing sector, which in turn stimulates further securitization of mortgages. Moreover, government policies aimed at bolstering housing finance systems in emerging markets are expected to create additional opportunities for growth.

The diversification of mortgage products, including the rise in demand for commercial mortgage-backed securities (CMBS), is another driving force for the market. Commercial real estate has shown robust growth, and investors are increasingly looking towards CMBS as a way to gain exposure to this sector. The structured nature of these securities, offering tranches with varying risk and return profiles, allows investors to tailor their investment strategies according to their risk tolerance.

In the context of the MBS market, Lenders Mortgage Insurance (LMI) plays a crucial role in facilitating homeownership, especially for borrowers who are unable to provide a substantial down payment. LMI is a type of insurance that protects lenders against the risk of borrower default, allowing them to offer loans with lower down payment requirements. This insurance is particularly significant in markets where home prices are high, and saving for a large deposit is challenging for many potential homeowners. By mitigating the risk for lenders, LMI enables more individuals to enter the housing market, thereby supporting the overall growth of mortgage-backed securities. As a result, LMI not only aids in increasing homeownership rates but also contributes to the liquidity and stability of the housing finance system.

Type Analysis

The mortgage-backed security market is bifurcated into Residential MBS and Commercial MBS. Residential MBS (RMBS) dominate the market due to the larger volume of residential mortgages compared to commercial ones. RMBS are typically backed by residential loans, including home mortgages, and are considered less risky. They offer a steady income stream to investors through mortgage payments made by homeowners. The demand for RMBS is bolstered by the high rate of homeownership and the continuous flow of new mortgages.

On the other hand, Commercial MBS (CMBS) are seeing increased traction due to their attractive yields and the growth of the commercial real estate sector. CMBS are backed by loans on commercial properties such as office buildings, retail centers, and hotels. They offer investors exposure to the commercial property market, which is often less correlated with the residential real estate market, providing an additional layer of diversification. The complexity and higher risk associated with CMBS attract sophisticated investors looking for higher returns.

Within RMBS, the market is further segmented into agency RMBS and non-agency RMBS. Agency RMBS are guaranteed by GSEs, making them more secure and attractive to risk-averse investors. Non-agency RMBS, though not backed by GSEs, offer higher yields and are appealing to investors with a higher risk appetite. The interplay betw

Interactive historical chart showing the 30 year fixed rate mortgage average in the United States since 1971.