Annaly Sees NII Jump to $1.14B as Mortgage Rates Fall to 6.09%
Annaly’s net interest income rose to $1.14 billion in 2025 from $247.8 million a year earlier, driven by three Fed rate cuts and 30-year mortgage rates easing to 6.09%. Its $92.9 billion in Agency MBS and diversified platform support a 12.14% dividend yield and a $1.5 billion buyback program.
1. Impact of Mortgage and Fed Policy
Mortgage rates fell to an average 6.09% for 30-year fixed loans as of mid-February, down from 6.87% a year earlier, while the Federal Reserve held its federal funds target at 3.50–3.75% after three 2025 cuts. Investors now anticipate two 25-basis-point rate cuts later in 2026, which would further reduce funding costs for mortgage REITs like Annaly.
2. Portfolio Composition and Diversification
As of December 31, 2025, Annaly’s $104.7 billion portfolio comprised $92.9 billion in liquid Agency mortgage‐backed securities, residential credit and mortgage servicing rights. The company’s October 2025 subservicing and MSR purchase pact with PennyMac expands servicing capabilities and diversifies income sources beyond Agency MBS.
3. Liquidity and Shareholder Returns
Annaly held $9.4 billion of assets available for financing, including $6.1 billion in cash and unencumbered MBS, providing a cushion to fund new investments. The firm raised its quarterly dividend to $0.70 per share in March 2025, yielding 12.14%, and launched a $1.5 billion share buyback program valid through 2029.
4. Valuation Metrics and Risk Outlook
Shares trade at a forward price-to-tangible book multiple of 1.12x versus the industry’s 1.05x, reflecting a premium valuation. Potential yield-curve shifts, interest-rate volatility or broader market stress could pressure performance, prompting some investors to seek a more attractive entry point.