Some publicly traded mortgage funds are showing signs of stress, demonstrating just how big the disruption to financial markets has been.
We’re referring to mortgage REITs, which borrow short term to buy longer-term mortgage-backed securities. Most of their profits, which come from the difference between their short-term borrowing costs and the interest they earn on the mortgages they own, get paid out in dividends, making them popular with income-seeking investors.
But when financial markets go haywire, they can get hit as their short-term borrowing costs jump—and that’s what’s happening now. The declines are reminiscent of the 2008-09 financial crisis, but this time
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