Jan. 12 at 10:08 PM
Bill Ackman floated a very âhedge fund fixes housingâ idea: add prepayment penalties to new mortgages so MBS investors donât have to price the borrowerâs free prepay option â he claims that could cut mortgage rates by ~65 bps. With 30Y fixed still around the low-6% area, you can see why the ideaâs getting airtime â even if itâs politically radioactive.
Tickers:
$MBB $ITB $TLT
Our view is this is directionally right on the math, wrong on the politics: prepay is basically a cultural ârightâ in US mortgages, so a real penalty regime is hard to push through. If this headline knocks housing-sensitive names on sentiment, weâd treat it as dip-buyable volatility, not a durable policy shock - the real driver is still rates + supply, not clever contract tweaks.