What is one characteristic of the income from mortgage-backed securities?

In the context of mortgage-backed securities (MBS), the characteristic of income being often lower than corporate bonds is accurate due to the risk and return dynamics associated with these financial instruments. Mortgage-backed securities comprise a pool of mortgage loans, and the income generated comes from the principal and interest payments made by borrowers.

Typically, MBS offers a yield that reflects its relatively lower risk when compared to corporate bonds, which often have higher yields to compensate for additional credit risk. This is primarily because corporate bonds are subject to the creditworthiness of the issuing corporation, whereas MBS is backed by a diversified pool of mortgages which can be influenced by the performance of the underlying real estate market and government backing on certain types of MBS (like those issued by Fannie Mae or Freddie Mac).

While it is essential to note that not all MBS have guaranteed income, particularly those without government backing, on average, investors may expect yields from MBS to be lower than those from corporate bonds, especially when comparing investment-grade corporate bonds to MBS with a higher risk profile. Thus, income from mortgage-backed securities tends to be comparatively lower than what’s typically offered by corporate bonds in the market.