REAL ESTATE INVESTMENT TRUSTS
Equity REITs own income-producing properties, typically commercial, and earn rental income; mortgage REITs provide financing by buying or originating mortgages and mortgage-backed securities, earning interest and displaying greater sensitivity to rate changes; hybrid REITs combine both approaches. Most REITs are publicly traded on exchanges such as the NYSE or Nasdaq, offering high liquidity under SEC oversight. As an asset class, REITs have historically delivered competitive total returns versus the S&P 500, meaningful income (11.4% average annualized since 2000 per your figures), diversification due to low correlation with stocks and bonds, and straightforward accessibility since they trade like stocks. Past performance is not indicative of future results.
LOWER INTEREST RATES
Lower interest rates generally support real estate and REITs by reducing borrowing costs for developers and owners, making it easier to finance new projects, refinance existing debt, and expand operations; lower mortgage rates also spur home buying and commercial leasing, lifting demand, while reduced discount rates raise the present value of future cash flows, supporting property prices and REIT share values. This flows through the lending supply chain: the Federal Reserve sets the discount rate and targets the federal funds rate, which influence banks’ cost of funds and benchmarks like SOFR that shape pricing for mortgages, credit, and commercial loans. When the Fed raises rates, borrowing becomes more expensive and activity often slows; when it lowers rates, financing becomes cheaper and growth can accelerate.
REFINANCING
Refinancing replaces an existing loan with a new one—usually at a lower interest rate—to reduce total interest, lower monthly payments, or shorten the term; it’s most compelling when rates have fallen, your credit score has improved, or you want to switch from a variable to a fixed rate, though closing costs and fees can erode savings and extending the term may lower the payment but raise total interest over time. Example: a $1,000,000 mortgage from 2015 at 6.0% for 30 years has a monthly payment of about $5,995; after 10 years the balance is roughly $837,000, and refinancing that into a new 20-year fixed at 4.0% would cut the payment to about $5,071.