As the Federal Reserve embarks on an interest rate easing cycle, three stocks are poised to reap significant benefits: Upstart, Lending Club, and AGNC Investment. These companies have been battered by higher interest rates, but with rates falling, they could be smart buys today.
Upstart and Lending Club, two personal lenders, have struggled as consumers have become wary of taking on debt amidst rising interest rates. However, with credit card debt at an all-time high and interest rates near record levels, these lenders could see a surge in demand as consumers look to refinance and consolidate their debts at lower interest rates. Lending Club has been preparing for this opportunity, developing tools to help consumers manage their debts and offering single payment plans.
AGNC Investment, a mortgage real estate investment trust, has been hurt by higher interest rates, which have increased its borrowing costs and decreased the value of its mortgage-backed securities portfolio. However, with interest rates falling, AGNC’s borrowing costs could decrease, while its investments in higher-yielding mortgage-backed securities could provide a boost to its net interest spread and portfolio value.
With the Fed expected to cut interest rates further in the coming years, these three stocks could be well-positioned to benefit. Upstart and Lending Club could see a surge in demand for their loans, while AGNC Investment could see its net interest spread and portfolio value increase. As the interest rate environment continues to shift, these stocks could be worth considering for investors looking to capitalize on the trend.
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