how do banks make money on mortgage bonds 
banks make money on mortgage bonds by selling the mortgages they originate to mortgage aggregators or other investors these mortgage aggregators bundle the mortgages into mortgage backed securities and sell them to investors now that these mortgages are off the balance sheets of the banks they can originate new mortgages to new lenders the bottom linemortgage bonds provide a safer investment alternative than corporate bonds as they come with collateral however they may not be a good option for investors seeking high returns when investing in mortgage bonds it s important to understand the quality of the underlying asset to gauge any possible defaults 