Mortgage Bonds Are Finding Ready Buyers in REITs Flush With Cash

Mortgage REITs are snapping up bonds backed by US home loans at a pace last seen before the pandemic, taking advantage of relatively cheap valuations and rallies in their own shares that helped them raise fresh cash.

Formally known as mortgage real estate investment trusts, the firms are expected to buy about $30 billion of mortgage debt securities on a net basis this year, according to Barclays Plc. This alone would be the most in at least six years, and Goldman Sachs Group Inc. pegs the tally even higher at about $50 billion.

The buying is fueled in part by ...