Other investment booms have ended with a pullback in investment that has slowed growth sharply, and we should be mindful that such an outcome is not impossible. Indeed, the recent releveling of the stock prices of some high-tech companies may suggest that we are entering a period of reduced optimism about future profits and less rapid growth in business investment.
Of course, intermediaries still play a vital supporting role in today’s mortgage market by originating and servicing mortgages and by holding mortgage-backed securities in their investment portfolios. The interest rate risk inherent in home mortgages is still present in mortgage-backed securities.