Mortgage-Backed Securities Market: Current Analysis and Forecast (2025-2033)

Mortgage-backed securities (MBS) are fixed-income securities that utilize mortgage loans as collateral and the source of funds for payments on the security. The creation of MBS begins with a financial institution, such as a bank or credit union, extending a mortgage loan to a borrower. The lender will then pool groups of loans with similar characteristics to create securities themselves or sell the loans to issuers of mortgage-backed securities to handle the aggregation of loans and pooling. The loans are sold to a trust, which will be the issuer of the MBS. Once securitized, the MBS can be sold to investors or retained as investments.

The Mortgage-backed securities market is set to show a growth rate of about 6.49% during the forecast period (2025-2033F). The global Mortgage-Backed Securities (MBS) market is growing steadily due to increasing mortgage origination, supportive government-backed programs, and increasing investor demand for secure, fixed-income assets. Residential and commercial mortgage pools are actively securitized through pass-throughs and structured CMOs, serving institutional and individual investors. Additionally, innovations such as ESG-compliant MBS and digital securitization platforms are further improving transparency and efficiency. While changes in interest rate and credit risk pose challenges, strategic partnerships, M&A activities, and improved regulatory frameworks are boosting market stability.

Based on the type category, the market is categorized into commercial MBS, residential MBS, and others. Among these, the residential MBS segment has the largest market share because of the high volume of home loans and government-backed programs. The government-backed programs offer guarantees that ensure timely payments to investors, reducing credit risk and thus boosting market expansion. However, commercial MBS is exhibiting the fastest growth due to the growth of commercial real estate, including offices, retail centers, warehouses, and industrial properties, which has expanded the volume of commercial loans available. Commercial mortgage-backed securities (CMBS) generally provide a better return rate than residential MBS, attracting investors. Furthermore, innovations such as structured CMBS products with tranches tailored for various risk levels further boost market growth.

Based on the maturity category, the market is categorized into short-term, medium-term, and long-term. Among these, the short-term segment dominates the market share due to lower risk and greater liquidity. Investors frequently prefer short-term bonds as they offer quicker principal repayment and faster access to funds, reducing the credit risk and high interest rate. In addition, short-term bonds are more liquid and attractive to investors looking for predictable cash flows, especially when interest rates fluctuate, thereby driving the market growth. However, the long-term segment is experiencing the fastest growth due to rising demand for long-duration home loans. Investors are also looking for bonds that offer higher return rates, thereby driving the growth of the market.

Based on the issuer category, the market is categorized into government agencies, private institutions, government-sponsored agencies, and others. The government-sponsored agencies segment dominates the market due to their large-scale issuance of residential MBS backed by government guarantees. These guarantees further lessen credit risk for investors, making them highly attractive and stable. Additionally, the long-standing presence and well-established infrastructure of these agencies further improve their market position. The private institutions segment, however, is experiencing the fastest growth due to the expansion of commercial MBS, rising interest rates, and innovative structured products. Furthermore, private institutions such as JPMorgan Chase, Goldman Sachs, and Wells Fargo are increasingly expanding into emerging markets and leveraging advanced risk assessment technologies, which allow them to issue larger volumes of MBS more efficiently, hence driving market growth.

For a better understanding of the demand of mortgaged backed securities, the market is analyzed based on its worldwide adoption in countries such as North America (U.S., Canada, and the Rest of North America), Europe (Germany, U.K., France, Spain, Italy, Rest of Europe), Asia-Pacific (China, Japan, India, and the Rest of Asia-Pacific), and Rest of World. Among these, North America has been the market leader due to its well-established financial infrastructure, robust institutional framework, well-regulated securitization system, as well as the increasing demand for residential property loans. The Asia Pacific region is, however, likely to be growing the fastest over the next years due to rapid urbanization, the region's low interest rate, and increasing demand for residential properties. Moreover, strong government policies for mortgage and securitization are further attracting investors to invest in the market. For instance, in September 2025, the Japan Housing Finance Agency sold USD 340 million of residential mortgage-backed securities, thereby increasing home loan availability, attracting more investors, and driving the growth of the market.

Some major players running in the market include Fannie Mae, Freddie Mac, JPMorgan Chase & Co., Ginnie Mae, Wells Fargo & Company, Bank of America, Goldman Sachs, Morgan Stanley, Deutsche Bank AG, and Royal Bank of Canada.