How one MBS investor thinks provide and demand will get again in sync

The shrinking supply of affordable homes sought by a growing number of households has been further complicated by federal officials’ renewed interest in boosting rates and secondary-market volatility.

This has made things tougher for the mortgage and housing industries, which have had to get creative to provide emerging would-be homeowners with affordable financing homes since officials began raising rates to fend off inflationary pressures, creating multiple challenges for the market. These include, most recently, Silicon Valley Bank’s collapse, which was partly related to how it failed to adjust its mortgage-backed securities investments for the impact of rate hikes.

Dynex Capital CEO Byron Boston, an industry veteran, has seen a lot of market gyrations over time and has some thoughts on how all this might ultimately be resolved. It won’t be an easy process for the industry as it’ll involve going through the housing correction that federal monetary policy officials have said they’re looking for in their fight against inflation. But it could eventually return put the balance of supply and demand in the market back on more of an even keel.

Boston has been working with publicly traded companies since the early 2000s, and is wary of current risks to the housing finance and banking systems, but confident in his ability to navigate them knowledgeably.

In his latest interview with this publication, Boston shared his views on some of complexities involved in the current balance of supply and demand in housing, mortgage and securitizations markets

The following are excerpts from an interview with Boston, edited for clarity and length.

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