Mortgage REITs: 3 Trends To Watch This Earnings Season
Mortgage REITs have taken center-stage over the last two months - and for the wrong reasons - amid the ongoing coronavirus pandemic. mREITs plunged nearly 70% in March before recovering.
Extreme and unprecedented levels of interest rate volatility triggered a wave of margin calls and a self-reinforcing cycle of "forced selling" which pushed the mREIT sector to the absolute brink.
Mortgage REIT earnings season kicks-off this week. All 41 mREITs will report results over the next three weeks in what will surely be the most consequential and newsworthy earnings season.
Interim updates from residential mortgage REITs indicated that the permanent damage to book value was not as devastating as once feared for the majority of mREITs.
While mREITs are not out of the woods yet, we believe that the residential mortgage market remains on firm footing amid a positive fundamental backdrop for the U.S. housing markets over the next decade.