U.S. stocks rise on Fed cut bets; earnings continue to flow
Investing.com - The Trump administration is considering declaring a "national housing emergency" to address housing affordability issues, according to a new Wolfe Research report. The real estate market’s volatility is reflected in the performance of major REITs, with InvestingPro data showing the Schwab U.S. REIT ETF trading at $21.44, down nearly 6% over the past year.
Speculation has increasingly focused on potential large-scale mortgage-backed securities (MBS) purchases as a means to reduce mortgage rates, with analysts examining the legality, likelihood, and impact of direct intervention in the MBS market. According to InvestingPro, real estate investment vehicles have shown resilience, maintaining consistent dividend payments - a key metric tracked by institutional investors.
Wolfe Research suggests the administration could utilize government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which currently have approximately $250 billion in capacity to purchase additional MBS under existing rules. If Treasury and the Federal Housing Finance Agency were to remove limits on their retained portfolios, the GSEs could potentially absorb over $1 trillion in MBS.
The report indicates a major intervention could reduce mortgage spreads by approximately 50 basis points, though analysts expect the actual scale and impact would likely be smaller. Wolfe Research considers speculation about 5% mortgage rates next year "aspirational" even with administration intervention.
President Trump’s simultaneous push for GSE privatization adds complexity to the timing and scale of any potential mortgage market intervention, according to the analysis. For investors tracking the real estate sector, InvestingPro data reveals the REIT market currently offers a 2.96% dividend yield, with additional insights and metrics available to subscribers.
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