I’m just going to talk about fixed-rate US agencies. Treasuries are option-free, while fixed rate mortgages include a prepayment option. Also, these mortgages have a strong implicit backing of the US Government, so there is no default risk.

The article is about a spread, so the risk-free and interest-rate-volatility terms will be shared with a treasury.

The dynamics of that prepayment risk are complex, and there is a vast literature on the subject. This article simplifies it enormously, based on my experience in this field.