Seeking Alpha

Mortgage REITs hammered as rates jump

  • Armour Residential (ARR -2.9%), CYS Investments (CYS -2.3%), and Hatteras Financial (HTS -2.5%) are leading the mREIT sector (REM -1.3%) lower as interest rates again move sharply higher.
  • Other movers include Annaly (NLY -1.6%), Western Asset (WMC -1.5%), and Ellington (EARN -2.2%), (EFC -2.1%).
  • Other ETFs: MORT, MORL.
  • Still occasionally lumped in with mREITs, specialty mortgage servicers gain as the market now realizes the value of MSRs increases as rates move higher (fewer prepayments). Ocwen (OCN +4.1%), Nationstar (NSM +2.4%), Walter Investment (WAC +1.8%).
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Comments (5)
  • William Packer
    , contributor
    Comments (726) | Send Message
     
    $EFC credit book better today because of surge in home prices. Stock should be up 5 percent not down 3 percent.
    3 Sep 2013, 01:40 PM Reply Like
  • Darren McCammon
    , contributor
    Comments (2131) | Send Message
     
    Which is an opportunity.
    3 Sep 2013, 01:58 PM Reply Like
  • Wileycoy
    , contributor
    Comments (58) | Send Message
     
    Was just waiting for this op :)
    3 Sep 2013, 03:07 PM Reply Like
  • hummerh25
    , contributor
    Comments (99) | Send Message
     
    Good time to buy, at $4.
    Interest rates are going to stay where they are or going lower, As long as Obummer is still in office.
    3 Sep 2013, 07:24 PM Reply Like
  • solar financier
    , contributor
    Comments (41) | Send Message
     
    Slower prepayment speeds due to steeper yield curve, improving home prices in major markets due to declining unemployment and declining market share of GSE due to FHFA restrictive credit underwriting standards are major benefit to specialty mortgage servicers like Ocwen (OCN). I recommend purchase at current levels <$50 per share and expect expanded share repurchase to provide downside protection near term. Capable management with significant ownership is key to long term appreciation potential. Did I mention stock price has increased sharply since end of Great Recession in March 2009 ( OCN vs SPY )?
    23 Jan 2014, 06:29 AM Reply Like
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