Fed Raise Helps Most Mortgage Stocks Close Higher

Mortgage stocks for the most part saw price per share gains in the wake of the Federal Open Markets Committee decision to raise short-term rates.

Economists had predicted a mortgage rate increase and had included the Fed's actions in their forecasts; those predictions show a drop in overall volume for 2016, but home purchase lending will increase year-over-year. The most recent Freddie Mac Primary Mortgage Market Survey had the 30-year fixed-rate mortgage rate increasing in anticipation of the Fed's move.

Stonegate Mortgage Corp. ended the day up $0.34 per share, or 7.2%, to close at $5.06, while PHH Corp. closed at $15.46, up $0.69 per share, or 4.7%. Nationstar also posted a gain of over 4% on the day, closing up $0.46 per share to $11.42. Earlier in the day, the stock traded at $10.96 per share, near its 52-week low of $10.80 per share (which occurred on Monday).

Redwood Trust finished the day up 3.4%, increasing $0.43 to $13.02 per share.

On the other hand, commercial mortgage banker Walker & Dunlop lost $0.11 per share to close at $28.47 while Walter Investment Management Corp. lost $0.15 per share to close at $13.57.

Also closing on the negative side of the ledger was three of the four publicly traded private mortgage insurance companies. Rising interest rates could put a damper on new insurance written. Radian Group lost 3.09%, or $0.41 per share, to close at $12.87. Essent lost 1%, or $0.23 per share, to close at $22.86 and MGIC also lost 1%, or $0.09 per share, to close at $8.98.

National MI, which hit a 52-week low on Tuesday, gained 2.35%, or $0.16 per share, to close at $6.97.

As for the title insurers, whose business is heavily dependent on mortgage origination volume, Stewart lost $0.03 per share, Old Republic gained $0.01 per share, while both First American and Fidelity National Financial gained $0.14 per share.

The Dow Jones Industrial Average zoomed upwards on the announcement to close up 224 points on the day.