A callable-bond cannot rise far above its call price, because the issuer will simply refinance. A mortgage-backed-security behaves the same way: falling rates trigger refinancing, so your high-coupon bonds get paid off at par exactly when you wanted to keep them. Rising rates, meanwhile, extend the life of the bond and deepen the loss.
This is the worst shape in fixed income: capped upside, uncapped downside. You are compensated with extra yield, and the fair value of that compensation is what option-adjusted-spread measures.
Example: yields fall 1% and an MBS gains 2.5%. Yields rise 1% and the same MBS loses 4.5%. A plain Treasury of the same duration would have gained 5.4% and lost 4.7%.
Related: convexity