2 Mortgage REITs to Buy on Sale
Mortgage real estate investment trusts (REITs) have struggled mightily since the beginning of the COVID-19 pandemic. First, they were beset with margin calls as the mortgage-backed securities market froze in the early days of the pandemic. This forced all of them to sell mortgage-backed securities at fire-sale prices in order to raise cash to meet margin calls.
After that, we saw a wave of refinancing activity, which caused all of their high-coupon bonds to pay off early. Finally, the reemergence of inflation has meant volatility in the bond market, and that inevitably works against holders of mortgage-backed securities.
That said, we are seeing early indications that suggest inflation is slowing down. While the sector is not yet out of the woods, these mortgage REITs are interesting candidates for investors who like contrarian ideas.
Source Fool.com
