Mortgage stocks should benefit from lower interest rates in 2026, but the strongest performances will be driven by other sources of value creation, including lower expenses from artificial intelligence-driven workflows, according to BTIG analyst Eric Hagen.

“Most stocks are coming off a strong year of performance driven by accommodative Federal Reserve policy, which was necessary in order for the stocks to rebound following Liberation Day,” Hagen wrote in a report on Friday.

“Picking up another 20%+ total return next year will likely hinge on valuation improvement for most stocks (especially the mortgage REITs), however we’re optimistic there details ⇒

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