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ARMOUR Residential REIT, Inc. Message Board

  • time_will_tell_10 time_will_tell_10 Feb 4, 2013 8:22 AM Flag

    wonderfull news for ARR shareholders.

    Mortgage Market Update

    Mortgage rates in the US have been climbing since the beginning of the year. This is despite record easing from the Fed to keep long term rates down. The average 30-year mortgage rate edged up 3.53%, it’s the highest since September, while the average 15-year rate increased 10 basis points to 2.81%. Mortgage rates are on the rise as housing inventories are shirking driving up home prices. The Case-Shiller index increased 5.5% in November, its biggest gain since August 2006.

    While increased home prices are a sign of rebounding real estate, at the same time it makes housing more expensive for those who want to buy a house. This is reflected in a decline in home loan applications for the first time in January. The MBA index decreased 8.1%, after a 7% gain in the linked week, while the refinancing gauge fell 10.2% and the purchase index dropped 1.8%.

    Mortgage REITs sector

    I believe the above mortgage market update is a positive sign for the Agency mortgage REITs, which were hurt badly due to Operation Twist and QE3. Among the widely followed mREITs, Annaly Capital Agency , American Capital Agency (NASDAQ: AGNC) and Armour Residential (NYSE: ARR) are poised to benefit from the hike in mortgage rates. I believe if the rates continue to surge for the greater part of the first quarter of the current year, the aforementioned mortgage REITs will be able to sustain their current double digit dividend yields. The remaining of the investment thesis aims to look into each mortgage REIT’s projected income’s interest rate sensitivity and how a hike in rates can translate into a surge in projected income.

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    • You are an idiot if you think mortgage rates rising is going to "benfefit from a hike in mortgage rates" ... you should not be investing in anything buy an index mutual fund if that is what you believe ... Geeze, anybody thinks they are an investor these days ... do you know what ARR's leverage ratio is? Do you know what affect rising rates have on the valuation of an MBS portfolio that is highly leveraged? Do you know what happens to ARR's book value as it's highly leveraged portfolio of MBSs decrease in value? Read the 10-K ... the entire 10-K ... it's all in there. I'm not saying this is doom & gloom because I don't really see rates going anywhere in a hurry ... but, at least have a clue what you are talking about ... Geeze!

      Sentiment: Hold

      • 3 Replies to blueskydriving
      • "Do you know what affect rising rates have on the valuation of an MBS portfolio that is highly leveraged?"

        Which rates?

        I won't play "quiz show" with you on this. Short-term rates going up quickly is what hurts REITs and the original poster posted a long term rate. I haven't seen short term rates move much at all. To the extent they have moved, they have moved downward as a weighted average on January and thus far in February.

        "Rates going up hurts reits" is some kind of by-line for people who don't know which rate they're talking about.

        Profitability goes up when BV goes down, and BV goes up with profitability goes down (speaking within the context of spread income). Spreads are wider than they have been for six months and appear to be getting wider. Lower book value on the way, and higher profitability.

        Stow the name calling - everyone has something to learn from someone else, including yourself.

        Warlord

      • blusky,
        Thanks for your posts. I can only shake my head at all the responses you received, as not one of them addresses anything you said. In fact, pretty much all of them just sling turds when you were only educating. Please post more frequently and just put these people on ignore.

      • Oops, I'm an idiot too ... meant to say,

        You are an idiot if you think MREITs are going to "benfefit from a hike in mortgage rates" ...

        Sentiment: Hold

    • jhsjhs66@gmail.com jhsjhs66 Feb 4, 2013 9:37 AM Flag

      Gm time... thanks for this interesting post .

      Sentiment: Buy

 
ARR
3.690.000(0.00%)Dec 26 4:01 PMEST

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