Mortgage Rates Declining: Will it Aid AGNC Investment's Performance?

AGNC Investment Inc. AGNC performance and prospects are significantly influenced by mortgage rates. According to a Freddie Mac report, the average 30-year fixed-rate mortgage fell to 6.81% as of June 18, 2025, down from 6.84% the previous week and 6.87% in the same week last year.

Given relatively lower mortgage rates, the company reported net interest income (NII) of $159 million in the first quarter of 2025 against the negative net interest income of $30 million from the prior-year period.

Further, the consistent downward trend is improving housing affordability, leading to an increase in mortgage originations and refinancing activity. This will likely reduce operational and financial challenges for mREITs like AGNC Investment and increase the gain on sale margin and new investment activity.

How Are AGNC's Peers Positioned in the Mortgage Market?

AGNC Investment peers’ Annaly Capital Management NLY and Arbor Realty Trust ABR performance are also influenced by mortgage rates.

Annaly is also benefiting from the interest rate environment. Its net interest income of $264.6 million indicates a strong recovery from the $6.45 million loss reported in the year-ago period. With improving purchase originations and refinancing activities, Annaly will likely witness book value improvement in the coming period as spreads in the Agency market tighten, driving asset prices. This should also boost net interest spread, improving the portfolio's overall yield for Annaly.

Despite relatively lower mortgage rates, Arbor Realty (ABR) NII declined 27.2% to $75.4 billion in the first quarter of 2025. However, with declining mortgage rates and relatively lower interest rates, Arbor Realty will likely witness an increase in net interest spreads. This will ease earnings pressure for Arbor Realty as it is facing rising funding costs.

AGNC's Price Performance, Valuation & Estimates

AGNC Investment shares have lost 5% in the past year compared with the industry's decline of 7.5%.

One-Year Price Performance

From a valuation standpoint, AGNC Investment trades at a forward price-to-earnings (P/E) ratio of 5.67X, below the industry’s average of 7.89X.

Price-to-Earnings F12M

The Zacks Consensus Estimate for AGNC’s 2025 and 2026 earnings implies a year-over-year decline of 11.2% and 3.9%, respectively. The estimates for 2025 and 2026 have been unchanged over the past 30 days.

Estimates Revision Trend

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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