Mortgage-backed securities are becoming more mainstream, with banks, insurers, and pension funds making the products key components of their portfolios, a new survey found.

Mortgage products "are standing alongside" corporate or government securities as popular investments, said Jeannette Rogers, research chief at Capital Access International, which released the survey this month. This was not the case five years earlier, when the Murray Hill, N.J., research firm found fewer investors holding smaller percentages of mortgage assets.

Mortgage securities "have really become fundamental investments," Ms. Rogers said. She based the assessment on the firm's recent survey of institutional investors. Capital Access polled chief investment officers and bond department heads at more than 3,000 firms and received responses from 446.

The results provide a rare snapshot of the secondary mortgage market, from the perspective of who is investing, what kinds of securities they are buying, and what kind of collateral is being used.

Just how popular are mortgage assets? The survey found 87% of respondents buy the products for their portfolios. Their holdings range from less than $1 million to several billion dollars.

Their popularity shows that mortgage investments have smartly recovered from the black eye they received in 1994 and 1995 when interest rate volatility caught many investors off-guard. Indeed, the products are consistently outpacing such popular instruments as Treasury securities and corporate debt.

Mortgage securities "are providing better, more consistent returns" than a number of other investments, Ms. Rogers said.

Banks are among the biggest buyers of mortgage investments, making purchases for their own books and for their customers, the survey showed. About 54% of banks have more than $1 billion of mortgage assets in their own portfolios, and 21% have put more than $1 billion worth in trust accounts they manage.

Investors choose securities backed by fixed-rate mortgages almost twice as often as they buy products backed by potentially more volatile variable- rate loans.

As for collateral, 75% of respondents are in securitized pools of conventional single-family loans. Whole, or unsecuritized loans, are held by 32%, while just 5.4% venture into securities backed by distressed mortgages.

In addition to standard mortgage securities known as pass-throughs, investors are displaying a taste for more complex products. The most popular of these products, real estate mortgage investment conduits, or Remics, combine pass-throughs and whole loans to create investments with various maturities and risk levels. About 82% of respondents buy Remics that are backed by government agencies like Fannie Mae and Freddie Mac. And 58% buy Remics made from nonconventional loans.

More esoteric securities are gaining popularity, too, the survey showed. Eight of 10 respondents buy structured securities like PIs or POs that provide just interest or principal payments. Just two of 10 respondents were buying these products five years earlier.

Unchanged from 1992 is the proportion-3.5%-that buy mortgage-backed securities with foreign loans as collateral.

The survey also showed the role that ratings agencies play in building investor confidence in nonconventional mortgage products. Over one-third of respondents require some kind of rating on mortgage products that don't conform to Fannie Mae and Freddie Mac standards. Standard & Poor's Corp. is the most often cited, with 45% of respondents buying securities that have undergone the firm's review.

About 41% of investors hold securities rated by Moody's Investors Service, and Duff & Phelps Corp. and Fitch Information Services have reviewed products held in about 35% of portfolios.

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