Mortgage prepayment rates jump to their highest level since 2005 as homeowners take advantage of...

Mortgage prepayment rates jump to their highest level since 2005 as homeowners take advantage of record-low rates (and federal assistance) to refinance. At the rate seen in August, 25% of current debt would be erased in a year, according to LPS. Not surprisingly, the mREIT sector - taking it on the chin for the past few days - is lit up bright red again today.

Comments (28)
  • Jack Rice
    , contributor
    Comments (1500) | Send Message
    AGNC finished up, perhaps because it is known to have a prepayment-defensive portfolio. Oddly, MTGE, which has the same management as AGNC and presumably an equivalent prepayment-defensive portfolio, participated in the sell-off.
    3 Oct 2012, 04:25 PM Reply Like
  • MBowers104
    , contributor
    Comments (3) | Send Message
    AGNC and ARR up. NLY down only $.03.
    3 Oct 2012, 04:36 PM Reply Like
  • MexCom
    , contributor
    Comments (3069) | Send Message
    Pre payments are not the only problem - its the spread. New mortgage bonds have a lower coupon. Are we the only ones that figured this out. I'll be selling more of these mREITs to save the capital invested.
    3 Oct 2012, 04:41 PM Reply Like
  • Tomporter
    , contributor
    Comments (7) | Send Message
    All of us retired, older people are going to be in bad shape after the first of the year. It seems like everyday there is bad news for us. If it is not MReits, it is the "Cliff" we are facing. Last year it was loss of income from Cd's and all the calls on Preferred stocks. Now we are all worred about loosing the preferred rate on Qualified Dividends and the increase of the income tax rate on income between $70,700 and $142,700 which may go up to 28% from 25%. I am glad I am 78 years old. I would not want to be just starting out in this crazy world we now live in.
    3 Oct 2012, 05:05 PM Reply Like
  • Brian Bobbitt
    , contributor
    Comments (2083) | Send Message
    Look at PSEC and other BDC's and their similar brethren. The tax treatment may be just up your alley. I like it, have been in PSEC since just before they lowered their dividend, when all said to bail, I held, and making 11% on the Div, and made $2 on growth, that figures to about 23% up til now, after being told by all to get out.


    Capt. Brian
    The Lost Navigator


    PS stay in the REITs for now.
    4 Oct 2012, 05:47 AM Reply Like
  • AlbionWood
    , contributor
    Comments (941) | Send Message
    I don't see how you can complain about being "in bad shape" if you're making over $70,000 in retirement. Doesn't sound so bad to me. Most people would be pretty happy with that!


    I guess the preferred tax treatment for dividends, and the so-called "Bush tax cuts," must be some of those "entitlements" I keep hearing so much about.
    5 Oct 2012, 08:40 PM Reply Like
  • Brian Bobbitt
    , contributor
    Comments (2083) | Send Message


    Get ALL accounts in cash pre new year. Wait for the dust to settle then re-deploy your assets into other things that allow you best tax advantage. If you have a ROTH IRA, don't take any more out of it, until after the new year, and sell all stocks until you see where this thing is going. I am doing this pre-election. If you need retirement money and don't have 6 months worth in your checking account, then fill it now and you will not be forced to take a big hit on taxable events.


    I can suffer a few months of no dividends, but most of my stuff is in IRA, ROTH, and SEP plans, so some tax help is there.


    Same with annuities, watch how you take your money. It may be better to take distributions this year, and pay the tax, put the money in your working capital account, and re-deploy it post new year, post dust settling, you get my drift.


    Under certain circumstances you can switch your regular IRA into a ROTH and then back again as your profits and taxes require. Yes, there are fees, and taxable events, so be sure you got it figured out in advance. If you are in profit, you will pay tax on taking the money out of a regular IRA but NOT a ROTH.


    Figure out, if you exit the Regular IRA, you just lost the tax deduction, and taxes are due. BUT! If the gain of flipping it into a ROTH,which does not tax distributions, then you pay less taxes overall, and reap the profits out of the ROTH.


    Now if you ROTH has losses, then flip it back into a regular IRA, take the money get the tax advantage back etc., etc. You can keep doing this as the market gives and takes away, and the net is less for the government, and more for you.


    If your IRA's are small, it is probably not worth it, but if you have contributed for many years, and the balances in your accounts are high, then the gains can we well worth the exercise now and then.


    You have a few weeks left to re-think all your investments. The stock market could crash due to many things, and I fear that more than the fiscal cliff.


    The secret here, my fellow retiree, is caution, and get some cash available so you are not caught in big taxable events.


    I feel, if Obumma wins, he will hit us dividend players between the eyes, and any other thing he can find to pay for his foolish monetary policies.


    "Socialism is a philosophy of failure, the creed of ignorance, and gospel of envy, its inherent virtue is the equal sharing of misery” Winston Churchill


    Perhaps now we can better understand why one of president Obama’s first executive decisions after taking office was to return the bust of Winston Churchill to Great Britain, one of closest allies.


    And I concur, I would not wish to be being born today.


    Capt. Brian
    The Lost Navigator
    7 Oct 2012, 11:06 AM Reply Like
  • anthony zarillo
    , contributor
    Comments (4) | Send Message
    Long time energy and mining and financial analyst
    3 Oct 2012, 05:05 PM Reply Like
  • Claude51448
    , contributor
    Comments (23) | Send Message
    NYMT is down today but above what they priced their 13.5 million shares of $6.89. This happened two months ago when they issued another block of share at $6.77 and the stock went straight back to $7.60. They are using the money to buy more mortgages and working capital, the same use for the funds as before. It closed at $6.91. My guess is it's above $7.00 by this time next week.
    3 Oct 2012, 05:05 PM Reply Like
  • Kurtwalter
    , contributor
    Comments (73) | Send Message
    At least book value goes up if current holdings are re-appraised!
    3 Oct 2012, 05:08 PM Reply Like
  • soitanly
    , contributor
    Comments (18) | Send Message
    Look at the nearly straight-up one year chart for TWO. I don't see the market pricing in a problem. Two Harbors management is doing a great job navigating uncertain waters, even to testing the retail housing market with their novel experiment.
    3 Oct 2012, 05:15 PM Reply Like
  • bertpom
    , contributor
    Comments (41) | Send Message
    Sell off might be due to dividend payments, or shares issue (like in NYMT case). But AGNC, CIM, AI hold on pretty well...
    3 Oct 2012, 05:16 PM Reply Like
  • saltspring
    , contributor
    Comments (14) | Send Message
    another roller coaster
    3 Oct 2012, 05:37 PM Reply Like
  • jmodrkrk
    , contributor
    Comments (94) | Send Message
    I think DX was ex div today too.
    3 Oct 2012, 05:49 PM Reply Like
  • TwistTie
    , contributor
    Comments (2429) | Send Message
    Which color is red?
    3 Oct 2012, 05:50 PM Reply Like
  • georgebeddoe
    , contributor
    Comments (1164) | Send Message
    Sarcasm is unwanted an unappreciated.
    3 Oct 2012, 07:16 PM Reply Like
  • joe gottlieb
    , contributor
    Comments (7) | Send Message
    unsatisfying! more details and consequences
    3 Oct 2012, 06:06 PM Reply Like
  • U Mass baseball
    , contributor
    Comments (29) | Send Message
    This article came out after COB on the market today. If true, tomorrow could be a zinger for REIT's.
    3 Oct 2012, 06:34 PM Reply Like
  • mjc99
    , contributor
    Comments (89) | Send Message
    I believe the Bloomberg article came out before COB. The comments at the end of that article start at least 4 hours before COB so maybe some of the impact has already been priced in.
    3 Oct 2012, 07:52 PM Reply Like
  • AlbyVA
    , contributor
    Comments (839) | Send Message
    Really people, prepayments with tighter lending restrictions and underwater homes? Puhlez!!!
    3 Oct 2012, 07:46 PM Reply Like
  • User 125723
    , contributor
    Comments (3) | Send Message
    Cim spread is large amd mostly hi rate non agency paper that cant be refinanced
    3 Oct 2012, 10:24 PM Reply Like
  • Paul003
    , contributor
    Comment (1) | Send Message
    Am a retired 72 year old male divorsee who still sees the mREIT dividends (about 12 -14 %) as better than my bank acct interest of less than one-half of one percent. With the current mREIT divident rate, I can keep pace a little better with inflation than keeping my money in the bank. With the inflation effects of the Federal Reserve's QE1, QE2, and now QE3 in printing US fiat dollars that have no real backing except our faith in our government, it is better right now to have my money invested into the mREIT area for the higher dividends, unless something better comes up..
    3 Oct 2012, 10:35 PM Reply Like
  • stetsoninc
    , contributor
    Comments (12) | Send Message
    My take is almost any home owner that could refinanced already has; the record low rates are only marginally lower than where they have been over the last nine months 4% (start of the year) down to 3.4% for 30YR.
    3 Oct 2012, 10:46 PM Reply Like
    , contributor
    Comments (30) | Send Message
    LEE 99 .. I don't think author is looney or short. Just another Chicken Little type. I'm tired of hearing how the sky is falling on mREITs. Even with reduced dividends of late, they still offer a darn good return in this low interest rate environment. Try getting 12% at your bank!
    3 Oct 2012, 10:56 PM Reply Like
    , contributor
    Comments (30) | Send Message
    LEE 99.... I don't think author is either looney or short. Just a chicken-little type. I'm tired of hearing that the sky is falling on mREITs. Even with reduced dividends, they offer the best returns (for a reasonable risk) in this low interest rate environment. Try getting 12% at your bank!
    3 Oct 2012, 10:57 PM Reply Like
  • getgl
    , contributor
    Comments (869) | Send Message
    Looks like a buying opportunity. Look, rates are going to stay low for any other fixed income like cds and bonds are no longer paying much either. The Fed has stated it clear enough. mReits still work for most who need income. Buy slowly and average down, but they are not going out of business anytime soon.
    4 Oct 2012, 07:10 AM Reply Like
  • mgj4891
    , contributor
    Comments (21) | Send Message
    A major minor cause of the house bubble was reversible morgages.Bernanke I read favors such action so as to have a job creating modern types of manipulation on real problems of money flow into things really needed. In this instance deflation becomes a threat when no one wants to buy high priced homes the banks paid out to some reversible morgage owners as a pension. Just another hair to swallow in the modern fiat currancy war.
    4 Oct 2012, 07:35 AM Reply Like
  • jwduval51
    , contributor
    Comments (2) | Send Message
    What does anybody have to say about ARR?
    9 Oct 2012, 09:38 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs