Regulators should tighten oversight of the largest mortgage real-estate investment trusts to ensure rising rates do not push the firms into asset sales that could potentially disrupt the market, the International Monetary Fund said. Per Bloomberg:

Repercussions might roil the REITs’ lenders, disrupt the $5.3 trillion market in which they invest and damage the broader U.S. economy, according to its Global Financial Stability Report released today.

Further rate rises might “lead to a more destabilizing unwinding of positions,” with a surge of 0.5 percentage point or more reducing the portfolio values at the biggest mortgage REITs “enough to generate at least temporary dislocations in the MBS market,” the Washington-based group said.