Making sense of MBSs Mortgage Backed Securities gaining popularity SINCE MY first article on Mortgage Backed Securities (MBSs) appeared, | have been answering questions from people calling to iearn more about them. This article will further explore MBSs and should give investors a better idea of what to look for and what questions to ask when select- ing an investment. The recent pop- ularity of MBSs has been due to increases in interest rates, the sig- nificant difference between market interest rates and those offered by banks, and the growing number of individuals who want security and regular income, Financial newspapers repuiarly quote MBS information whit includes pool number. issuer. coupon, maturity date, price and yield on a selection of issucs. The pool number is used to identify the specific poo! of mort- gages that have been securitized. Issuers usually have more than one pool outstanding at any time. Most of the large mortgage lenders are issuers of MBS. banks and trust companies have several pools each, outstanding. The coupon rate is the stated interest payment for the pool to the investor. As with bonds. it usally reflects market interest rates at the time of issue and is fixed until maturity. Fifteen days after maturi- ty date is the final payment — this includes the last interest payment and the return of all outstanding principal. Russell VMoldowan THE E BOTTOM LINE Pricing of MBSs is a function of many factors, most importantly the following: term to maturity, stated coupon, current interest rates and whether it is prepayable or not. Yield is directly tied to price and all MBS investors look at vield to make their decision. MBSs pay monthly and as such their rate of return must be calculated to compare with other interest-paying investments. The monthly payment from an MBS will be the sum of the stated interest payment, the scheduled principal repayment and any Pre- payments. Many investors prefer non-pre- payable to prepayable MBSs because of the assurance of contin- ued payments to maturity. However, as interest rates rise the probability of homeowners refinancing at a higher rate is lower than when interest rates are falling and investors should wel- come the opportunity to be repaid early so that they may re-invest at higher rates. Presently, returns on pre- payable pools are slightly lower to reflect the likelihood of early prin- cipal repayments. Choosing a pre- payable pool should be done with the assistance of a qualified invest- ment adviser. The returns available from an investment in Mortgage Backed Securities are very good. The fact that interest is paid monthly makes them a perfect investment for seniors and others needing a regu- lar monthly income. The bottom line is this: interest rates are attractive and investors can take best advantage of increas- es by fully exploring their opportu- nities. A call to your investment advis- er will ensure you have a competi- tive rate of retum. CMHC and Canadian banks have published booklets to answer questions on MBSs and other investments. Russell Moldowan is an invest- ment adviser in Vancouver, He advises on investment management and retirement planning. Write to Russell at P.O, Box 10342, Pacific Centre, Vancouver, B.C., Wy 1H6. Cates honored with award BUSINESS BRIEFS Compiled by Kate Zimmerman North Shore business groups und individu. als wishing to submit items to Business Briefs can fax them to the attention of Kate Zimmermun at 935-2104, Cates wins award North Vancouver's C.H. Cates and Sons Limited was onc of six pioneering firms and organizations honored with the Vancouver Board of Trade Business Hal) of Fame Awards at the Pan Pacific Hotel. The Vancouver Board of Trade recognizes firms and organizations which have provided 100 years or more of continuous service to the province. Cates and Sons is the city’s old- est tug boat firm and traces its ori- gins back to 1885. The sompany was entirely owned by the Cates family until 1992, when it was pur- chased by Dennis Washington of Washington Corporations. Today it employs 115 people and operates 20 tugs, 24 hours a day. The other companies honored “were Murchie’s Tea and Coffee Ltd., St, Paul’s Hospital, Inchcape Shipping Services, Hotel Vancouver and the Vancouver Museum. Be Your Own Golf Pro North Vancouver residents Jennie and Joe Boulanger want to help golfers become their own golf pro. The couple recently opened an indoor videotaping facility for golfers in Burnaby, offering five driving range-type stalls where golfers can privately view and tape their golf swings. Be Your Own Golf Pro Ltd., located at 4450 Juneau St. in Burnaby, allows customers to take their own VHS tape home for fur- ther reference. Cali 298-2466 for more information. Opportunities open for Canadians in India Seminars on Opportunities for WHEN YOU STOCK UP ON STAMPS WE'LL GIVE YOU THE ENVELOPES FREE! A With a min, purchase of 50 - 43¢ stamps, we'll Include ’ 50 high quality, #10 business-sized envelopes (value $5.00) NO CHARGE Expires August 313t, 1994 William Meek Printing Lower Lonsdale Postal Outlet 121 East 1st Street Telecommunications for Canadian Companies in India will be held in Vancouver June 21. The half-day event should be of interest to com- panies hoping to collaborate with indian firms in areas such as tele~ com equipment manufacturing, tele- phone network operations, telecom- related software development, value-added services, system inte- gration and cable TV. Call Janet McCandless at 844-1900 for fur- ther details. Yacht Club reno nets award for West Van team The West Vancouver Yacht Club renovation by the West Vancouver firm of David Weiser Architect has been honored by the Canadian Wood Council with its 1994 Merit Award for Design in the renovation category. The bi-annual competi- tion, which is open to all architects practising in Canada, attracted 130 submissions. Entries were judged by a jury of three distinguished See Videotape page 28 mallings with this coupon. (Limit one coupon per item.) GUARANTEED SERVICES to most locations in Canada. 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Sponsored By: to change without notice FINANCIAL PLANNING Brian Lancaster received his Honors in Business Administration Degree fromm the University of Western Ontario. He is currently part of the team responsible for marketing Templeton Funds across Canada. THE NAKAMUN GROUP - Organizing your finances and estate planning in the current political climate. - Templeton Group's approach to investing and the place for Emerging Markets Investrnents. Wednesday, June 29, Lonsdale Quay Hotel 123 Carrie Cates Court North Vancouver 1994 2 p.ra. or 7 p.m. Seating Limited! For Your Reservations Call: DEBBIE 687-4612