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Last week's big decline in mortgage applications was all about refinancing as the hiccup in...

Last week's big decline in mortgage applications was all about refinancing as the hiccup in interest rates slowed business. The overall decline of 7.9% was led by a 9% drop in the refi index, which fell to its lowest level since early July. Strangely, the mortgage REITs are lit up bright red today. Aren't prepayments a key leg of the bear case against them?
Comments (18)
  • the bright red is more due to sector rotation than anything else, all the yielding sectors are getting hit lately... LQD MRK ED FE,, a bunch of them.
    22 Aug 2012, 11:11 AM Reply Like
  • I see a quick recovery from this hiccup. Refinance processes will slow down and the REITs will be good to go again. High Yields will continue.
    22 Aug 2012, 11:12 AM Reply Like
  • I see this as pro-log to the future. On the sell side today. In a decline, the quicker you sell the less you lose.
    22 Aug 2012, 11:21 AM Reply Like
  • Just means more shares at lower cost - which means higher yields! I have yet to see any real bad news for mREITs.
    22 Aug 2012, 11:27 AM Reply Like
  • A lot of retirees, including myself, have mREIT's to generate dividend income. I don't see any volume changes, and these stocks seem to channel, I DRIP my dividends at the bottom of the channel.
    22 Aug 2012, 11:35 AM Reply Like
  • The group of people who rely upon div stocks for income represent the next bubble to pop as soon as market forces reduce the attractiveness of NLY and its competitors. Sooner or later the move into equities will increase and the rush for the exit door will get crowded. I like NLY but sell prem when the stock moves <=16 and buy it back when => 17. I am invested < 50% of the time and my income exceeds the div. YMMV.
    22 Aug 2012, 01:34 PM Reply Like
  • <<I DRIP my dividends at the bottom of the channel.>>

     

    How do you DRIP at the bottom of the channel? Yes, reinvestment of dividends at the bottom of the channel is an excellent choice. However, quarterly distributions from trust shares are generally paid about six weeks after ex-date, the end of the following month, so enrolling in a DRIP automatically reinvests during a ten to fifteen day period following the pay date. DRIP allows for no control, although typically costing less in commission and allows purchase of partial shares.

     

    Controlling when a distribution is reinvested eliminates the benefits of DRIP, and brings in the aspect of timing the market. Both have their advantages, and I do both. DRIP in small accounts in which I want the distribution invested in the same trust. Manually reinvesting in larger accounts in which I want to compute which of my list of choices is yielding the highest at the point in time when payment meets readiness.

     

    I am asking because I know of no way to influence when a DRIP purchase is made, since it is spelled out in the Dividend ReInvestment Plan, and the plan is a legal contract dictating the when.
    22 Aug 2012, 04:23 PM Reply Like
  • What do you think mREITs are: ETFs? No, they are equities, just like any other. I just like the dividends like everybody else. You just have to pat attention to one's entry and exit points. That sort of sounds like stocks in general. I am long AGNC, TWO, ARR, MTGE, CYS and NCT.
    29 Aug 2012, 11:48 PM Reply Like
  • See WSJ page A2 article on Fannie Freddie regs "make short sales of underwater homes easier for homeowners ..... (that ) haven't missed mortgage payments" . Potential to increase prepay rate.
    22 Aug 2012, 11:43 AM Reply Like
  • This is like the "blue-light" specials K-Mart used to have. Discount money!! Just doubled (+) my holdings of ARR @ $7.16. When opportunity knocks, be there with cash in hand.
    22 Aug 2012, 12:29 PM Reply Like
  • I like pull-backs so close to ex-dividend dates,
    its as if you just got invited to a special midnight
    sale at the market.
    There is usually one or two of these a month before
    ex-div of these reits and also MLPs that have good
    dividends.
    You can ignore the opportunity or if you think fundamentals
    haven't changed and you have the bucks, why not get you some?
    snow
    22 Aug 2012, 02:59 PM Reply Like
  • I'm out of AGNC and NLY right now. I think I'll wait for their next dividend announcements.
    22 Aug 2012, 03:02 PM Reply Like
  • Nobody really knows on a day to day basis... obviously the wrong move is a knee jerk reaction... especially before the next ex-dvdnd date which would compound a loss if a cut and run is initiated too soon... The long view is the road to stay on ...Drip on the lows and stay the course for now....
    22 Aug 2012, 03:14 PM Reply Like
  • Come-on. There's no place to go. Why do you buy, income. Want to speculate, speculate. The long haul is two years even if the curve continues to flatten. One last word, if you have been successful in paying the $ dips, continue. But know why you're into REITs.
    22 Aug 2012, 03:45 PM Reply Like
  • It is all about dividends, period.
    22 Aug 2012, 04:31 PM Reply Like
  • Any one waiting for ARR to drop below 7? I am
    22 Aug 2012, 10:24 PM Reply Like
  • I don't that's happening any time soon. It's 7.48.
    31 Aug 2012, 03:50 PM Reply Like
  • Yeah - and it's all about the big money boys. Choice stocks to short and cover. Call ir rotation if you wish. There's no place to hide from these funds and banks when they decide it's time to make money on the downside.
    22 Aug 2012, 10:30 PM Reply Like
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