Seasoned mortgage is a mortgage that has been in effect for at least one year and on which Principal and Interest payments are being made on time.
- In the context of securitisation, seasoned mortgages are typically considered to be lower risk than unseasoned mortgages.
This is because seasoned mortgages have a track record of on-time payments, which gives investors more confidence that they will continue to be paid in the future.
Seasoned mortgages are also typically more liquid than unseasoned mortgages, which means that they can be more easily bought and sold by investors.
Here are some applications of seasoned mortgage in securitisation:
- To reduce risk: Seasoned mortgages can be used by securitisation issuers to reduce the risk of their securities. This is because seasoned mortgages are typically considered to be lower risk than unseasoned mortgages.
- To increase liquidity: Seasoned mortgages can be used by securitisation issuers to increase the liquidity of their securities. This is because seasoned mortgages are typically more liquid than unseasoned mortgages.
- To attract investors: Seasoned mortgages can be used by securitisation issuers to attract investors. This is because investors typically prefer to invest in seasoned mortgages, as they are considered to be lower risk and more liquid.