Given a mortgage portfolio with the following features,

1) Spread, 40 basis points

2) Last year default rate of mortgages of the same category, 0.5%

3) Historically average mortgage default rate, 2%

4) Historical recovery, 70% of face value

 Questions

Is this mortgage portfolio really making money?

Which is the minimum spread required to make money?

Note = Take into account that a mortgage is a long term instrument