The Mortgage REIT Profit Killer?


Up today, Foolish analysts Andrew Tonner and Anand Chokkavelu discuss one potential hidden threat to mortgage REIT's profits.

As the New York Times recently reported, the interest rate spread for banks is twice the level it was in 2007. This can be great for banks, as it creates an environment for higher profits. But, as Anand points out, REITS sit downstream from banks, so if banks spreads are increasing, then REITS are decreasing. It's a zero sum game that right now seems tipped in the banks favor. This has implications for popular REITS like American Capital Agency (NAS: AGNC) and Annaly Capital (NYS: NLY)

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The article The Mortgage REIT Profit Killer? originally appeared on

Austin Smith has no positions in the stocks mentioned above. The Motley Fool owns shares of Annaly Capital Management. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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