Freddie Mac’s Q2 2023 Profits Leap To $2.9B

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Freddie Mac’s Q2 2023 Profits Leap To $2.9B

Aug 11, 2023 | News | 0 comments

Freddie Mac recorded a net income of $2.94 billion in the second quarter, marking a 41% increase from the previous quarter and a 20% increase from the same period last year. Similar to its counterpart Fannie Mae, another government-sponsored enterprise, Freddie Mac’s strong performance in the second quarter was attributed to the upward trajectory of home prices.

During Wednesday’s announcement, company leaders stated that home prices experienced a 2.4% increase during the second quarter and are projected to rise by an additional 0.8% by the conclusion of the year. Consequently, Freddie Mac released $537 million that had been set aside in loss reserves, playing a role in its greater profit compared to the previous quarter.

In a statement, Freddie’s CEO Michael DeVito mentioned that during the second quarter, single-family home prices achieved stability due to robust demand, elevated residential mortgage rates, and a restricted supply of homes for sale. He further noted that renters faced financial strain as rents increased alongside declining prices for multifamily properties. Throughout the quarter, Freddie Mac maintained its dedication to its mission and achieved a strong performance. This effort facilitated 372,000 individuals in purchasing, refinancing, or renting a home, with the majority of these options being affordable for borrowers and renters with low to moderate incomes.

During the second quarter, the majority of Freddie’s activity, accounting for 89%, was attributed to purchase loans, while only a minor portion of 11% originated from refinancing transactions.

Below are a few more key points discussed during the second quarter conference call:

  • Net revenues reached $5.3 billion, down 1% YoY due to lower net interest income, partially balanced by increased non-interest income.
  • Financed 258,000 mortgages, 55% being affordable to low- to moderate-income families; facilitated 102,000 first-time homebuyers.
  • New single-family business activity at $83 billion in Q3, a 40% YoY decrease.
  • Single-family mortgage portfolio grew 3% to $3 trillion YoY, its growth slowing as rates rose.
  • Completed around 20,000 single-family loan workouts. Nearly 62% of the single-family mortgage portfolio has credit enhancements.
  • Multifamily new business activity at $13 billion, down 13% YoY. Multifamily mortgage portfolio for Q2 was $427 billion, up 3%. Freddie Mac’s net worth rose to $41.96 billion from $39 billion in the previous quarter.