The FHFA House Price Index shows geographical divergence
The FHFA House Price Index breaks down home price appreciation by region and by state.
While most indices showed the housing market bottoming out around February 2012, the FHFA House Price Index showed it bottoming out around May 2011.
The FHFA House Price Index only looks at houses with mortgages guaranteed by Fannie Mae and Freddie Mac.
Mortgage REITs, especially agency REITs such as Annaly Capital (NLY) and American Capital Agency (AGNC), are exposed to rate volatility.
Book values per share are generally lower than they were when the taper tantrum began, even though rates have moved back close to prior levels.
Mortgage REITs such as Annaly Capital can generate outsized returns over the long haul. Part of this is due to the mortgage-REIT tax structure.
Ginnie Mae TBAs lost 11 ticks, while Fannie Mae TBAs lost only 9 ticks. This is a function of continued low rates and also changes out of the FHFA.
The Fannie Mae 3.5% TBA started the week at 104 19/32 and gave 10 ticks to close at 104 9/32. The ten-year yield increased 6 basis points.
The ten-year bond yield has increased by 41 basis points over the past two weeks, while mortgage rates are up only two basis points.
Overall, we’ve seen the 10-year bond yield pick up 47 basis points over the past three weeks.
Last week, we learned that housing starts for January fell from 1.087 million to 1.065 million. Building permits fell from 1.06 million to 1.05 million.
For REITs, it will be about Humphrey–Hawkins this week. The bond market will probably be vulnerable to begin with, given that we have a deal in Greece.
Since 2008, MFA Financial has paid a quarterly dividend as low as 8 cents and as high as 27 cents a share. It has also made periodic special cash dividends.
MFA reported net income of $0.20 a share, higher than Wall Street’s estimate of $0.187 per share. Book value per share decreased 1.9%, to $8.12 per share.
REITs hold mortgage-backed securities and other assets that pay interest. On the liability side, they use various techniques to finance their balance sheet.
As a REIT, MFA Financial must distribute 90% of its income to its shareholders, and it isn’t subject to income tax at the corporate level.
The ten-year bond sold off by 10 basis points, with yields increasing from 1.95% to 2.05%. Ginnie Mae TBAs lost 7 ticks, while Fannie Mae TBAs lost 3 ticks.
The Fannie Mae 3.5% TBA started the week at 104 22/32 and gave up 3 ticks to close at 104 19/32. The ten-year yield increased 10 basis points.
The ten-year bond rose 10 basis points and mortgage rates fell 1 basis point, to 3.81%. Mortgage rates appear to be “playing catch-up” with the ten-year.
Mortgage REIT MFA Financial (MFA) reported earnings last week, beating numbers by 3 cents a share. Book value per share decreased, however.
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