Sticky Inflation, Surging Treasury Yields Push Mortgage Rates To 2-Month Peak: Real Estate Stocks Tumble
Portfolio Pulse from Piero Cingari
The U.S. housing market is under pressure as mortgage rates hit a 2-month peak of 6.87%, driven by strong economic data and higher-than-expected inflation. This has led to a decrease in mortgage applications and a significant drop in real estate and mortgage-related stocks. The Real Estate Select Sector SPDR Fund (XLRE) and the iShares Mortgage Real Estate ETF (REM) saw declines of 1.8% and 3.9%, respectively. Individual stocks like Claros Mortgage Trust, Inc. (CMTG), Ares Commercial Real Estate Corporation (ACRE), and New York Mortgage Trust, Inc. (NYMT) also experienced notable drops.
February 14, 2024 | 2:23 pm
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NEGATIVE IMPACT
Ares Commercial Real Estate Corporation (ACRE) saw its stock price decrease by 7.8%, affected by the inflation report and bond market response.
The drop in ACRE's stock price is closely linked to the adverse effects of the inflation report and the bond market's reaction on the real estate market.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Claros Mortgage Trust, Inc. (CMTG) experienced an over 8% drop, significantly impacted by the current economic conditions.
CMTG's sharp decline reflects the direct impact of higher mortgage rates and inflation on the company's stock price.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 80
NEGATIVE IMPACT
New York Mortgage Trust, Inc. (NYMT) fell by 6.3%, influenced by the rising mortgage rates and inflation concerns.
NYMT's decline is a reaction to the increased mortgage rates and inflation, affecting investor confidence in mortgage-related stocks.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
The iShares Mortgage Real Estate ETF (REM) saw a 3.9% drop, its lowest since mid-November 2023, due to the same inflationary pressures.
REM's significant drop is a direct result of the rising mortgage rates and inflation, impacting investor sentiment towards mortgage-related assets.
CONFIDENCE 85
IMPORTANCE 85
RELEVANCE 90
NEGATIVE IMPACT
The Real Estate Select Sector SPDR Fund (XLRE) fell by 1.8% due to rising mortgage rates and inflation concerns.
XLRE's decline is directly tied to the broader real estate market's reaction to increased mortgage rates and inflation, making it highly relevant and important for investors.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90