While most of the larger mortgage REITs began growing portfolios that were ravaged by market turmoil at the end of March, many smaller firms continued to shrink. (Includes data chart.)
As investors sift through the tea leaves of the bond market, the average daily trading volume in agency MBS increased 11% in July from the month prior. But where we go from here is anyone’s guess.
It’s here: A mortgage-backed security, 15-years in duration, that pays investors a note rate of 1.5%. Would you lock up your money for that long? You may not have a choice.
The REIT’s plan to terminate its management agreement with PRCM “for cause” would let it off the hook from paying a $144 million termination fee. But PRCM isn’t going down without a fight.
With overnight funding in the agency repo market hovering around 15 basis points and term repo rates a shade above the one-month LIBOR, yields for agency mREITs could edge upward, KBW analysts predict.
The creation of a U.S. sovereign wealth fund could grease the skids for an end to the conservatorships of Fannie Mae and Freddie Mac.
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