Why AGNC’s Stock Soared Wednesday | the furry fool


What happened

AGNC investments (AGNC 3.47%) rose as much as 4% in morning trading on Wednesday, the day before Thanksgiving. At 2:30 pm ET, the share price was up 2.8% to $9.77 per share.

On Wednesday, all major stock market indices were ahead. Nasdaq composite Up about 96 points, or 1%, as of 2:30 p.m. ET.

And then

It was a rough year for AGNC Investments (REIT) for mortgage real estate investing, but it brightened up a bit on Wednesday with some good news from the industry.

The Mortgage Bankers Association’s weekly mortgage application survey was released Wednesday and showed a slight increase in mortgage applications for the week ending November. on an unadjusted basis.

In addition, the refinancing index was 2% higher than last week, but still 86% lower than the same week a year ago. In addition, the purchasing index rose by 3% on a seasonally adjusted basis and 9% on an unadjusted basis last week. But it was about 41% lower than last year at the same time.

The catalyst for the improvement was a fall in mortgage rates. The 30-year fixed-rate mortgage fell from 7.08% last week to 6.67%.

Joel Kahn, vice president and deputy chief economist of the Mortgage Bankers Association, said:

The reduction in mortgage rates should improve the purchasing power of potential homebuyers, who have been largely sidelined by mortgage rates more than doubling over the past year. As a result of the fall in mortgage rates, both purchase and refinance applications have risen slightly over the past week. However, refinancing activity is still 80 percent below last year’s pace.

what now

Mortgage rates fell last week as inflation rates fell and may have peaked in October. But the housing market is still confused as home sales are lower than a year ago due to a combination of high mortgage rates, low inventories and still high house prices.

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However, with the Federal Reserve still raising interest rates, the market is unlikely to see much improvement over the next year, possibly 2024. While this weekly report shows some promise, it’s probably best to wait for the Fed to stop tightening or slow down. . Speed ​​control back with AGNC.

However, it does offer a monthly dividend of $0.12 at a yield of 15%, which it has maintained since the start of the pandemic, when it fell to $0.16. AGNC may be worth considering for its dividend, but it may still be best to wait for more visibility on the direction of rates and inflation.

Dave Kowalewski has no holdings in any of the listed stocks. The Motley Fool has no position in any of the listed stocks. The Motley Fool has a disclosure policy.




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