Interest-only mortgages are increasingly infiltrating fixed-rate securitizations, said analysts, and although IO concentration has been limited in fixed-rate MBS so far, factors, such as the increase in borrower demand, the convergence in IO and fully amortizing loan valuations and growing investor appetite, are expected to bolster their presence in fixed-rate deals going forward.

"Concentration of IO loans has been substantially low in fixed-rate securitizations, less than 10% in Alt-As and negligible in the prime sector," said Satish Mansukhani, head of mortgage strategy at Credit Suisse First Boston, noting that the IO share has been significantly higher - closer to 80% - in hybrid ARM securitizations.

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