Why Annaly Capital Management Fell 7.5% in 2021

While the housing market boomed in 2020, last year saw uncertainty grow about whether it could maintain its momentum and worries about the Federal Reserve raising interest rates caused the mortgage market to sag a little. Although Annaly Capital Management (NYSE: NLY) does not originate mortgages -- rather only buying and selling those backed by the full faith and credit of the federal government and packaged from Fannie Mae, Freddie Mac, and Ginnie Mae -- its stock still weakened in 2021 because of the concerns, falling 7.5% for the year, according to data provided by S&P Global Market Intelligence. Rising interest rates can hurt mortgage real estate investment trusts' (REITs) profits because they use current low interest rates to borrow money to buy assets (primarily mortgage-backed securities) that will produce high-margin returns in the future.