Mortgage Yield

Mortgage yield is the effective return that a lender earns from a mortgage, expressed as a percentage of the loan's outstanding balance. It includes interest payments and any fees or other income associated with the mortgage. Mortgage yield is an important measure for lenders, as it reflects the profitability of the loan. For investors in mortgage-backed securities, the yield helps assess the expected returns on their investment.

Example

A lender calculates the mortgage yield on a loan by factoring in the interest rate and fees paid by the borrower, resulting in an effective return of 5%.