Investing in Mortgage REITs in 2025

A close look at the mortgage REIT sector.

By Matthew DiLallo – Updated Oct 3, 2025 at 1:30 AM | Fact-checked by Frank Bass

Key Points

Mortgage REITs invest in mortgages and securities, focusing on financing real estate rather than equity ownership.
They use leverage to enhance returns, which introduces higher risks, especially with interest rate fluctuations.
mREITs must distribute 90% of their income as dividends, potentially providing high, though variable, yields.

Mortgage REITs, or mREITs, provide real estate financing by originating or purchasing mortgages or mortgage-backed securities (MBS). They are an essential part of the residential mortgage market, helping to finance about 1 million homes in the United States each year. They also support the commercial real estate sector by providing loans to develop, acquire, reposition, and own income-producing properties.

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An infographic explaining the risks of investing in mortgage real estate investment trusts (REITs). — Image source: The Motley Fool.

Here's a closer look at the overall mortgage REIT market and the sector's unique risks. Plus, we'll discuss a couple of interesting mREITs you might want to consider.

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Mortgage-Backed Securities (MBS)

Investments that take mortgages, pool them, and then sell the pools of loans to investors as a single investment.

How do mortgage REITs make money?

Mortgage REITs make money in several different ways depending on their business model. Here are some of the different income streams earned by mortgage REITs:

Loan origination fees: Some mREITs originate real estate-backed loans and earn a loan origination fee.
Mortgage servicing rights: Some mortgage REITs will service mortgages owned by third parties, earning a fee for serving these loans.
Interest income: Most mortgage REITs hold mortgages, MBS, and other real estate-backed loans that generate interest income.
Rental income: Some mREITs will also make direct equity investments in real estate, entitling them to the rental income generated by these properties.
Asset sales: Mortgage REITs often earn a gain (or book a loss) on the sale of assets, such as mortgages they originated and sell to a third party or MBS they no longer want to hold.

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Ticker Information Table
Name and ticker	Market cap	Dividend yield	Sector
Starwood Property Trust (NYSE:STWD)	$6.8 billion	10.30%	Financials
AGNC Investment Corp. (NASDAQ:AGNC)	$10.7 billion	14.12%	Financials

Data as of Oct 27, 2025.

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Here's a closer look at these two leading mortgage REITs.

1. Starwood Property Trust

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NYSE: STWD

Starwood Property Trust

Today's Change

(0.43%) $0.08

Current Price

$18.64

Key Data Points

Market Cap

$7B

Day's Range

$18.63 - $18.80

52wk Range

$16.59 - $21.05

Volume

2.2M

Avg Vol

2.8M

Gross Margin

86.60%

Dividend Yield

0.10%

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2. AGNC Investment

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NASDAQ: AGNC

AGNC Investment Corp.

Today's Change

(1.09%) $0.11

Current Price

$10.20

Key Data Points

Market Cap

$11B

Day's Range

$10.15 - $10.30

52wk Range

$7.85 - $10.63

Volume

24M

Avg Vol

19M

Gross Margin

100.00%

Dividend Yield

0.14%

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AGNC Investment is an mREIT focused on investing in mortgage-backed securities protected against credit losses by government agencies like Fannie Mae, Freddie Mac, and Ginnie Mae. The REIT only invests in MBS, which it does on a leveraged basis, primarily using repurchase agreements. It also uses a dynamic risk management strategy to protect the value of its portfolio from interest rate and other risks.

The REIT's simple strategy has enabled it to pay a stable monthly dividend for the last several years. That dividend stability has made it stand out in a sector where many of its rivals have reduced their dividend payments as interest rates rose.

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About the Author

Matt DiLallo has been a contributing Motley Fool stock market analyst specializing in covering dividend-paying companies, particularly in the energy and REIT sectors, since 2012. He also covers pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

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@MatthewDiLallo

Matt DiLallo has positions in Brookfield Asset Management and Starwood Property Trust. The Motley Fool has positions in and recommends Starwood Property Trust. The Motley Fool recommends Brookfield Asset Management. The Motley Fool has a disclosure policy.

Types of mortgage REITs

There are three main types of mortgage REITs:

Home financing: These REITs focus on investing in mortgages secured by residential real estate such as single-family homes, multifamily properties, and builder lots.

Commercial financing: These REITs concentrate on providing financing to the commercial real estate sector. They'll originate real estate-backed loans to fund the acquisition, development, or redevelopment of commercial real estate such as office buildings or warehouses.

Hybrid: These REITs invest in real estate-backed loans and make direct equity investments in real estate.

Risks of investing in mortgage REITs

Mortgage REITs are riskier than many other investments, including other REITs, because they face certain specific risks, including:

Interest rate risk: While changes in interest rates affect REITs overall, they have an even greater effect on mREITs because changes in short- and long-term interest rates can affect net interest margins by increasing the costs of funding and reducing interest income. Interest rate changes can also affect the value of an mREIT's mortgage assets, affecting its net asset value and share price.

Prepayment risk: Mortgage borrowers can refinance their loans or sell the underlying real estate. When that happens, it forces the mREIT to reinvest the repaid loan proceeds in the current interest rate market, which might be lower than the rate on the existing mortgage.

Credit risk: Mortgage REITs focused on commercial mortgages can face credit risks if borrowers default. Mortgage REITs that focus on residential loans backed by government agencies don't have to worry about this nearly as much.

Rollover risk: Residential mortgage REITs tend to own long-term mortgages and mortgage-backed securities. However, they often fund these purchases with shorter-duration borrowing since short-term interest rates are generally lower than long-term rates. This funding strategy creates rollover risk. The mREIT must obtain funding at attractive rates to roll over loans as they mature.

Investing in Mortgage REITs in 2025

A close look at the mortgage REIT sector.

Key Points

Mortgage-Backed Securities (MBS)

How do mortgage REITs make money?

1. Starwood Property Trust

NYSE: STWD

Key Data Points

2. AGNC Investment

NASDAQ: AGNC

Key Data Points

Related investing topics

Top Stocks to Buy and Hold in 2025

Understanding Treasury Bonds and Other Investments

Investing in Data Center REITs

Investing in Diversified REITs

About the Author

Our Guides

Premium Investing Services

What are mortgage REITs?

Are mortgage REITs worth investing in?

How are mortgage REITs affected by interest rates?

How often do mortgage REITs pay dividends?

Is there a mortgage REIT ETF?

What are the largest mortgage REITs?

Understanding mortgage REITs

How do mortgage REITs make money?

Types of mortgage REITs

Risks of investing in mortgage REITs

1. Starwood Property Trust

2. AGNC Investment

Related investing topics

Mortgage REITs offer higher dividends along with higher risk

FAQ

Two mortgage REITs to consider in 2025

NYSE: STWD

Key Data Points

NASDAQ: AGNC

Key Data Points