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Refinancing Demand Is Stirring Again: 3 Mortgage Stocks in Focus
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Key Takeaways
Refinancing demand is improving as lower mortgage rates lift borrower interest and mortgage activity.
RKT could benefit from higher refinance volumes and integration synergies from Redfin and Mr. Cooper.
AGNC and NLY may gain from a stronger Agency MBS market, though prepayment trends remain important.
Mortgage rates are showing signs of easing, putting refinancing activity back on investors’ radar. While the recovery remains gradual, even a modest decline in borrowing costs can be meaningful for mortgage-related stocks such as Rocket Companies, Inc. (RKT - Free Report) , AGNC Investment Corp. (AGNC - Free Report) and Annaly Capital Management, Inc. (NLY - Free Report) . After an extended period of elevated mortgage rates, affordability pressures and sluggish housing-market activity, the refinancing market is beginning to regain traction.
According to Freddie Mac’s latest Primary Mortgage Market Survey, the average rate on a 30-year fixed mortgage was 6.47% as of June 18, down from 6.52% in the prior week and 6.81% a year ago. Although rates remain well above the ultra-low levels seen earlier in the decade, the recent downward trend is encouraging for borrowers and mortgage-market companies.
Signs of improving refinancing demand are already emerging. The Mortgage Bankers Association reported that mortgage applications fell 3.8% for the week ended June 12, but refinance applications grew 17% year over year. Notably, refinancing accounted for 40.3% of the total mortgage applications, indicating that refinance activity is once again becoming a meaningful component of overall mortgage-market demand.
This trend matters because mortgage-related companies are highly sensitive to changes in interest rates, refinancing volumes, mortgage-backed securities (MBS) pricing and prepayment expectations. As borrowing costs decline, homeowners may become more inclined to refinance existing loans, creating opportunities for mortgage lenders and potentially improving conditions across the broader mortgage ecosystem.
The benefits, however, vary by business model. For mortgage originators, higher refinancing activity can boost loan application volumes, origination revenues and servicing recapture rates. For mortgage REITs, lower rates can support MBS valuations and book values, particularly when rate declines are orderly and volatility remains contained. However, if refinancing accelerates too quickly, faster prepayment speeds can affect the expected cash flows of mortgage securities and mortgage servicing rights, creating a more nuanced operating environment.
As a result, stock selection becomes particularly important. Rocket Companies is a more direct play on refinancing volumes and mortgage origination activity. Meanwhile, AGNC Investment and Annaly Capital Management are income-focused mortgage REITs whose performance depends not only on refinancing trends but also on factors such as MBS spreads, funding costs, leverage, hedging strategies and book-value preservation.
Let us take a closer look at RKT, AGNC and NLY and examine how each could benefit from a gradual recovery in refinancing activity.
Rocket Companies: A Direct Play on Refinance Volumes
Rocket Companies is the clearest refinancing beneficiary among the three. The company operates Rocket Mortgage and has a large direct-to-consumer mortgage platform, giving it direct exposure to changes in mortgage application and refinancing activity.
RKT's end-to-end platform is positioned to convert any cyclical lift into outsized share gains amid industry-wide turnaround expected in 2026, driven by lower mortgage rates. The combination of Redfin and Mr. Cooper has strengthened Rocket’s capabilities by adding scale and reinforcing stability, growth capacity and cost efficiency. The Redfin and Mr. Cooper integrations provide visible, near-term synergies with meaningful operating leverage upside. On the Mr. Cooper side, management has line-of-sight to $400 million in expense synergies, plus an incremental $100 million in revenues tied to higher blended recapture rates.
With an estimated 70% structural drop-through of incremental revenues to EBITDA after fixed costs and AI-driven capacity improvement, the platform is expected to scale volume without proportional headcount/cost escalations.
Management expects second-quarter 2026 adjusted revenues between $2.7 billion and $2.9 billion. As synergy capture ramps up, it will likely support the top line going forward.
The company’s 2026 earnings estimates have been unchanged at 76 cents per share over the past week, indicating a year-over-year upsurge of 171.4%. RKT has a Zacks Rank of #3 (Hold) at present.
Earnings Estimates
Image Source: Zacks Investment Research
AGNC Investment: A Mortgage REIT Leveraged to Agency MBS
AGNC primarily invests in agency mortgage-backed securities. These securities are backed by Fannie Mae, Freddie Mac or Ginnie Mae, reducing credit risks but leaving the company highly exposed to interest rates, MBS spreads, funding costs and prepayment trends.
Higher refinancing activity and a decline in mortgage rates could support AGNC Investment’s performance. Lower mortgage rates, if accompanied by reduced rate volatility, can improve agency MBS valuations, support book value and enhance the relative appeal of AGNC’s mortgage assets. AGNC’s first-quarter 2026 results showed net spread and dollar roll income of 42 cents per share and tangible net book value of $8.38 per common share.
AGNC’s active portfolio-management approach further strengthens its ability to navigate this environment. The company regularly adjusts its portfolio and hedge positions in response to changing interest-rate and mortgage-market conditions. Its focus on higher-coupon holdings, reduced exposure to non-agency assets and significant interest-rate hedge position could help stabilize cash flows while allowing it to benefit from improving agency MBS fundamentals.
That said, higher refinancing activity is not always bullish for AGNC. A sharp rise in refinancing can cause the underlying mortgages in MBS pools to prepay faster, reducing the duration of cash flows and pressuring premium mortgage securities. Therefore, while lower rates and improving refinancing trends can support AGNC, the pace and magnitude of refinancing activity remain key factors to watch.
The company’s 2026 earnings estimates have been unchanged at $1.56 per share over the past week, indicating year-over-year growth of 4%. AGNC has a Zacks Rank of #3 at present.
Earnings Estimates
Image Source: Zacks Investment Research
Annaly Capital: Diversified Mortgage Exposure
NLY’s strength lies in its diversified investment strategy, spanning residential credit, mortgage servicing rights (MSRs) and Agency MBS. This approach helps reduce volatility and interest rate sensitivity while targeting attractive risk-adjusted returns.
As of March 31, 2026, NLY managed a $106.7-billion portfolio, with $92.2 billion in liquid Agency assets. The company is also expanding its MSR business, which serves as a hedge against rising rates by gaining value when prepayments slow. By balancing Agency MBS with MSRs, it enhances yield, mitigates risks and positions itself for more stable long-term performance across rate cycles.
With easing mortgage rates and rising refinancing, Annaly is positioned for book value gains as tighter Agency spreads lift asset prices. A wider net interest spread should also enhance portfolio yields, supporting stronger financial performance ahead.
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Refinancing Demand Is Stirring Again: 3 Mortgage Stocks in Focus
Key Takeaways
Mortgage rates are showing signs of easing, putting refinancing activity back on investors’ radar. While the recovery remains gradual, even a modest decline in borrowing costs can be meaningful for mortgage-related stocks such as Rocket Companies, Inc. (RKT - Free Report) , AGNC Investment Corp. (AGNC - Free Report) and Annaly Capital Management, Inc. (NLY - Free Report) . After an extended period of elevated mortgage rates, affordability pressures and sluggish housing-market activity, the refinancing market is beginning to regain traction.
According to Freddie Mac’s latest Primary Mortgage Market Survey, the average rate on a 30-year fixed mortgage was 6.47% as of June 18, down from 6.52% in the prior week and 6.81% a year ago. Although rates remain well above the ultra-low levels seen earlier in the decade, the recent downward trend is encouraging for borrowers and mortgage-market companies.
Signs of improving refinancing demand are already emerging. The Mortgage Bankers Association reported that mortgage applications fell 3.8% for the week ended June 12, but refinance applications grew 17% year over year. Notably, refinancing accounted for 40.3% of the total mortgage applications, indicating that refinance activity is once again becoming a meaningful component of overall mortgage-market demand.
This trend matters because mortgage-related companies are highly sensitive to changes in interest rates, refinancing volumes, mortgage-backed securities (MBS) pricing and prepayment expectations. As borrowing costs decline, homeowners may become more inclined to refinance existing loans, creating opportunities for mortgage lenders and potentially improving conditions across the broader mortgage ecosystem.
The benefits, however, vary by business model. For mortgage originators, higher refinancing activity can boost loan application volumes, origination revenues and servicing recapture rates. For mortgage REITs, lower rates can support MBS valuations and book values, particularly when rate declines are orderly and volatility remains contained. However, if refinancing accelerates too quickly, faster prepayment speeds can affect the expected cash flows of mortgage securities and mortgage servicing rights, creating a more nuanced operating environment.
As a result, stock selection becomes particularly important. Rocket Companies is a more direct play on refinancing volumes and mortgage origination activity. Meanwhile, AGNC Investment and Annaly Capital Management are income-focused mortgage REITs whose performance depends not only on refinancing trends but also on factors such as MBS spreads, funding costs, leverage, hedging strategies and book-value preservation.
Let us take a closer look at RKT, AGNC and NLY and examine how each could benefit from a gradual recovery in refinancing activity.
Rocket Companies: A Direct Play on Refinance Volumes
Rocket Companies is the clearest refinancing beneficiary among the three. The company operates Rocket Mortgage and has a large direct-to-consumer mortgage platform, giving it direct exposure to changes in mortgage application and refinancing activity.
RKT's end-to-end platform is positioned to convert any cyclical lift into outsized share gains amid industry-wide turnaround expected in 2026, driven by lower mortgage rates. The combination of Redfin and Mr. Cooper has strengthened Rocket’s capabilities by adding scale and reinforcing stability, growth capacity and cost efficiency. The Redfin and Mr. Cooper integrations provide visible, near-term synergies with meaningful operating leverage upside. On the Mr. Cooper side, management has line-of-sight to $400 million in expense synergies, plus an incremental $100 million in revenues tied to higher blended recapture rates.
With an estimated 70% structural drop-through of incremental revenues to EBITDA after fixed costs and AI-driven capacity improvement, the platform is expected to scale volume without proportional headcount/cost escalations.
Management expects second-quarter 2026 adjusted revenues between $2.7 billion and $2.9 billion. As synergy capture ramps up, it will likely support the top line going forward.
The company’s 2026 earnings estimates have been unchanged at 76 cents per share over the past week, indicating a year-over-year upsurge of 171.4%. RKT has a Zacks Rank of #3 (Hold) at present.
Earnings Estimates
Image Source: Zacks Investment Research
AGNC Investment: A Mortgage REIT Leveraged to Agency MBS
AGNC primarily invests in agency mortgage-backed securities. These securities are backed by Fannie Mae, Freddie Mac or Ginnie Mae, reducing credit risks but leaving the company highly exposed to interest rates, MBS spreads, funding costs and prepayment trends.
Higher refinancing activity and a decline in mortgage rates could support AGNC Investment’s performance. Lower mortgage rates, if accompanied by reduced rate volatility, can improve agency MBS valuations, support book value and enhance the relative appeal of AGNC’s mortgage assets. AGNC’s first-quarter 2026 results showed net spread and dollar roll income of 42 cents per share and tangible net book value of $8.38 per common share.
AGNC’s active portfolio-management approach further strengthens its ability to navigate this environment. The company regularly adjusts its portfolio and hedge positions in response to changing interest-rate and mortgage-market conditions. Its focus on higher-coupon holdings, reduced exposure to non-agency assets and significant interest-rate hedge position could help stabilize cash flows while allowing it to benefit from improving agency MBS fundamentals.
That said, higher refinancing activity is not always bullish for AGNC. A sharp rise in refinancing can cause the underlying mortgages in MBS pools to prepay faster, reducing the duration of cash flows and pressuring premium mortgage securities. Therefore, while lower rates and improving refinancing trends can support AGNC, the pace and magnitude of refinancing activity remain key factors to watch.
The company’s 2026 earnings estimates have been unchanged at $1.56 per share over the past week, indicating year-over-year growth of 4%. AGNC has a Zacks Rank of #3 at present.
Earnings Estimates
Image Source: Zacks Investment Research
Annaly Capital: Diversified Mortgage Exposure
NLY’s strength lies in its diversified investment strategy, spanning residential credit, mortgage servicing rights (MSRs) and Agency MBS. This approach helps reduce volatility and interest rate sensitivity while targeting attractive risk-adjusted returns.
As of March 31, 2026, NLY managed a $106.7-billion portfolio, with $92.2 billion in liquid Agency assets. The company is also expanding its MSR business, which serves as a hedge against rising rates by gaining value when prepayments slow. By balancing Agency MBS with MSRs, it enhances yield, mitigates risks and positions itself for more stable long-term performance across rate cycles.
With easing mortgage rates and rising refinancing, Annaly is positioned for book value gains as tighter Agency spreads lift asset prices. A wider net interest spread should also enhance portfolio yields, supporting stronger financial performance ahead.
The company’s 2026 earnings estimates have been unchanged at $2.98 per share over the past week, indicating year-over-year growth of 2.1%. NLY has a Zacks Rank of #3 at present.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Estimates
Image Source: Zacks Investment Research