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Markets Score 55 Neutral

T. Rowe Price and Loomis Capital Invest in Undervalued Mortgage-Backed Securities

Apr 02, 2026 15:30 UTC
MORTGAGE, TROW, ^FVX
Medium term

T. Rowe Price Group Inc. and Loomis Capital are capitalizing on the recent decline in mortgage-backed securities (MBS) by increasing their purchases. The move reflects a strategic shift as investors seek opportunities in the fixed-income market amid market volatility.

  • T. Rowe Price Group Inc. and Loomis Capital are purchasing mortgage-backed securities (MBS) as they have become undervalued.
  • Spreads on current coupon MBS widened to 1.25 percentage points by March 31, compared to 0.94 percentage points in late January.
  • MBS have underperformed Treasuries for several months, creating a buying opportunity for institutional investors.
  • The recent market volatility, including the war in Iran and fluctuating bond yields, has contributed to the decline in MBS prices.
  • The increased demand for MBS may affect mortgage-related sectors but is unlikely to drive broad market changes.

T. Rowe Price Group Inc. and Loomis Capital are actively acquiring mortgage-backed securities (MBS) that have become undervalued following recent market turbulence. The decision comes as the fixed-income market experiences shifts in investor sentiment, driven by geopolitical tensions and fluctuating bond yields. Mortgage bonds have faced significant pressure, with spreads on current coupon MBS widening to 1.25 percentage points by March 31, up from 0.94 percentage points in late January. This marks a notable deviation from the six-month average of approximately 1.15 percentage points. The underperformance of MBS relative to Treasuries over the past few months has created a buying opportunity for institutional investors. The recent volatility, exacerbated by the war in Iran and erratic bond yield movements, has led to a broader weakening of notes in March. However, the pronounced decline in MBS spreads suggests that the securities have become relatively attractive compared to their historical performance. Institutional investors like T. Rowe Price and Loomis are positioning themselves to benefit from potential market stabilization. The growing interest in MBS could influence the mortgage-related sectors, particularly as demand for these securities increases. However, the impact is expected to remain confined to the fixed-income space rather than triggering broader market movements. The move underscores a tactical approach by major financial firms to capitalize on market dislocations in the current economic environment.

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