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Mortgage Rates End 2025 With Fresh Low: 3 mREIT Stocks in Focus

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Key Takeaways

  • Mortgage rates fell to 6.15% in late 2025 after hovering near 7% early, easing affordability pressures.
  • Lower rates and slower home price growth lifted pending home sales and restored momentum since mid-September.
  • Improving conditions could aid mREITs as tighter Agency spreads support book values and asset prices.

Mortgage rates ended 2025 at their lowest levels of the year, offering a welcome signal of relief for prospective homebuyers heading into 2026. According to a Freddie Mac report, the average 30-year fixed mortgage rate fell to 6.15% as of Dec. 31, 2025, from 6.91% a year ago, easing borrowing costs after an extended period of affordability pressure.

The year ultimately shaped up as a tale of two halves for mortgage rates. Rates remained stubbornly high near 7% throughout much of the first half of 2025, levels that curtailed activity during the traditionally strong spring homebuying season. However, conditions began to improve mid-year, with rates drifting lower and stabilizing around 6.2% since mid-September, driven by the Federal Reserve's monetary policy easing, helping restore some momentum to housing demand.

Lower mortgage rates, combined with slower home price growth, are lifting pending home sales. Even modest easing in affordability has been enough to draw buyers back into the market after a prolonged slowdown. The continued retreat in mortgage rates in the second half of 2025, alongside moderating home price appreciation, positions 2026 as a potential rebound year for the mortgage market. Amid such a backdrop, investors can keep mortgage real estate investment trust (mREIT) stocks like Ellington Financial Inc. (EFC - Free Report) , Annaly Capital Management (NLY - Free Report) and NexPoint Real Estate Finance (NREF - Free Report) on their radar.

The improving housing backdrop will ease financing conditions, improve transaction activity and stabilize demand, which could translate into stronger fundamentals and renewed investor interest in the year ahead. With a decrease in mortgage rates, improving purchase originations and refinancing activities, mREIT indsutry players will likely witness book value improvement as spreads in the Agency market tighten, driving asset prices.

3 mREIT Stocks to Keep an Eye on

Ellington Financial: The company invests in a diverse array of financial assets. These include residential and commercial mortgage loans and mortgage-backed securities, consumer loans, and asset-backed securities. The assets are supported by consumer loans, collateralized loan obligations, non-mortgage and mortgage-related derivatives, equity investments in loan origination companies, and other investments.

EFC is well-positioned to weather volatility in the mortgage market, supported by its diversified exposure across residential and commercial mortgage loan portfolios and strong momentum in its securitization platform. The company’s loan originations, especially in commercial mortgage bridge loans, proprietary reverse mortgages and closed-end second lien loans, continue to contribute to stable growth and income.

Ellington Financial is actively leveraging dynamic hedging strategies, maintaining a broad and balanced portfolio, securing multiple sources of financing and operating with low leverage. These measures reflect a disciplined approach to risk management and a commitment to preserving book value while adapting to shifting market conditions.

The company also pays out regular dividends. EFC’s dividend yield is 11.3%, and it has raised its dividend three times over the past five years.

The Zacks Consensus Estimates for 2025 and 2026 earnings indicate a year-over-year rise of 25.3% and 1.6%, respectively. It currently has a Zacks Rank of #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Estimates

 

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Annaly: The company's investment strategy is driven by the prudent selection of assets and effective capital allocation to achieve stable returns. Its investment strategy involves traditional Agency mortgage-backed securities (MBS), which provide downside protection, and investments in more non-agency and credit-focused asset classes that enhance returns.

NLY is focusing on improving its capabilities by acquiring newly originated mortgage servicing rights (MSRs) from its partner network, which will continue to provide a strong advantage in expanding its MSR business. Its diversified investment strategy will likely be a key contributor to long-term growth and stability. By diversifying its investments across the mortgage market, the company is better-positioned to capitalize on opportunities as they occur in multiple areas while limiting the risks associated with overexposure to any particular location.

The company also pays out regular dividends. NLY’s dividend yield is 12.2%, and it has raised its dividend once over the past five years.

The Zacks Consensus Estimates for 2025 and 2026 earnings indicate a year-over-year rise of 7.4% and 1.5%, respectively. Annaly currently has a Zacks Rank of #3 (Hold).

Earnings Estimates

 

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NexPoint: The company originates, structures and invests in first mortgage loans, mezzanine loans, preferred equity and alternative structured financings in commercial real estate properties, as well as multi-family commercial mortgage-backed securities.

NREF continues to identify and attract investment opportunities across its target markets and asset classes with a commitment to thorough evaluation aimed at enhancing shareholder value. The company remains optimistic about the resilience of multi-family rentals and single-family homes for rent, which benefit from strong long-term housing demand trends.

NexPoint is focused on operational resilience by originating new secured loans, while managing debt risks and maintaining funding stability. Its investments in the multi-family and single-family segments are well-positioned, supported by historical performance and a favorable rent versus own dynamic that provides long-term momentum for the sector.

The company also pays out regular dividends. NREF’s dividend yield is 14.2%, and it has raised its dividend three times over the past five years.

The Zacks Consensus Estimates for 2025 and 2026 earnings indicate a year-over-year rise of 1.7% and 6.3%, respectively. NREF has a Zacks Rank of #3 at present.

Earnings Estimates

 

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