Mortgage stocks rose broadly and strongly last week, lifted by a tide of merger talk.
The chief beneficiary of takeover speculation was Margaretten Financial, which shot up more than 25% after the company announced that it was in talks with possible acquirers.
For the week, the Mortgage Bankers Association's stock index ended at 96.37, ending a seven-week decline.
The announcement by Margaretten, which joins Lomas Financial and Arbor National Holdings on the auction block, fueled rapid rises in several other mortgage stocks. North American Mortgage closed the week at $24.375, up $2.125 for a gain of 9%.
American Residential Holdings also had a strong week, rising $1.75 to $17.50, for a gain of 11%. The company gained even though it had shelved a week ago the initial public offering of a real estate investment trust.
Investors took a wait-and-see attitude toward Lomas Financial, now several weeks into its quest for an acquirer or strategic partner. Lomas drifted up 12.5 cents, ending the week at $7.875.
The Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. both rose - Fannie Mae gained $1.875, to $83.25, and Freddie Mac, $2, reaching $56.50. A steadying of the credit markets probably helped the secondary market giants, according to Tom O'Donnell, an analyst at Smith Barney.
Today marks the beginning of American Banker's weekly look at mortgage-lending-related stocks. Each week, the mortgage section will include trading information on selected lenders, insurers, or secondary market agencies.
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The feature will also chart the stock index compiled by the Mortgage Bankers Associationof America. That index measures the market performance of 20 mortgage companies.