Interest Rates: Changes in interest rates, particularly those set by the Federal Reserve, significantly impact bond prices. Rising rates generally decrease bond values, and vice versa.

Credit Risk: The perceived creditworthiness of mortgage-backed securities (MBS) influences their pricing. Higher perceived risk leads to lower prices.

Prepayment Risk: Homeowners refinancing or paying off mortgages early affects the cash flow of MBS, impacting their value. Faster prepayments can reduce returns.

Inflation Expectations: Rising inflation erodes the real value of fixed-income investments like MBS, leading to lower prices.

Economic Growth: A stronger economy can lead to higher interest rates and increased demand for other assets, potentially decreasing MBS prices.

Market Liquidity: The ease with which MBS can be bought and sold influences their prices. Lower liquidity can lead to price volatility.

Supply and Demand: The relative supply and demand for MBS in the market directly affects their prices. Higher demand pushes prices up, while increased supply can lower them.