Mortgage Funding
Freddie Mac continues to support the U.S housing market by providing continuous liquidity, helping to ensure that America’s families have access to affordable mortgage funding and rental housing. With the housing market and broader economy still fragile, keeping the mortgage markets liquid and stable is critical. Today, Freddie Mac is making home possible for one in four borrowers and is one of the largest sources of financing for multifamily housing.
In the first quarter of 2013, Freddie Mac provided $138 billion of liquidity to the mortgage market, $111 billion of which supported single-family refinancing. Through this funding, Freddie Mac helped:
- 723,000 families buy a home, including nearly 540,000 who were able to refinance their mortgages into historically low rates and/or shorter terms.
- Approximately 87,000 families rent a home or apartment.
Since the beginning of 2009, Freddie Mac has provided nearly $1.9 trillion of funding to the mortgage market – helping nearly 9.6 million families buy, refinance or rent a home. Importantly, these borrowers are in homes they can afford now and also keep for the long-term."
At the beginning of the crisis, we strengthened our credit and eligibility standards to foster sustainable homeownership opportunities for the nation’s homebuyers and to protect taxpayers. As a result, the credit risk profile of our post-2008 books of business is significantly stronger as measured by original LTV ratios and FICO scores. These loans make up 67 percent of our single-family mortgage portfolio.
Single-Family Credit Guarantee Portfolio – Concentration
of Risk
| Year of Origination | % of Portfolio | Serious Delinquency Rate | % of Credit Losses |
|---|---|---|---|
| 2009-2013 |
67%
|
0.38%
|
45.5%
|
| 2005-2008 |
22%
|
9.48%
|
84.9%
|
| 2004 and prior |
11%
|
3.23%
|
9.6%
|
*Based on period-end holdings as of March 31, 2013. 2012 and 2013 portfolios include loans refinanced under the expanded HARP program with LTVs greater than 125 percent.
Other Benefits
Freddie Mac's role in the housing finance system has additional benefits for homeowners, lenders, and the housing market as a whole:
- Lower mortgage rates: Our liquidity contributes to lower mortgage rates for 30-year fixed-rate conforming mortgages relative to the "jumbo" mortgage loans we aren't allowed to buy. Over the last year, millions of borrowers have taken advantage of the lowest mortgage rates in five decades to buy and refinance homes.
- The 30-year fixed rate mortgage: We help make possible the freely prepayable 30-year fixed-rate mortgage on a scale that's unique to this country. The prepayable fixed-rate mortgage is the first choice for many consumers because it protects them from upward swings in interest rates and allows them to refinance whenever they want without penalty. By providing stability, certainty and flexibility in this way, the prepayable fixed-rate mortgage is a real economic asset for our nation.
- A "backstop bid" for mortgage lenders: Our lender customers know there will always be a buyer for their quality loans – which gives them the confidence to keep lending in any environment and in turn helps stabilize the market.
- We serve the market in good times and bad: We are an important counter-cyclical influence that stays in the market even when purely private capital has pulled out. This has been proven time and again - particularly during the events of recent years.