Press release·05/03/2025 07:20:55

Financial Performance Overview

Freddie Mac reported solid financial results for the first quarter of 2025, with net income of $2.8 billion, up 1% from the same period in 2024. Net revenues increased 2% year-over-year to $5.9 billion, driven by higher net interest income, partially offset by lower non-interest income.

The company’s net worth increased to $62.4 billion as of March 31, 2025, up from $50.5 billion a year earlier. This quarterly increase in net worth will be added to the aggregate liquidation preference of Freddie Mac’s senior preferred stock, which stood at $132.2 billion on March 31, 2025.

Freddie Mac provided $88 billion in liquidity to the mortgage market in 1Q 2025, enabling the financing of 313,000 home purchases, refinancings, and rental units. The company’s total mortgage portfolio grew 3% year-over-year to $3.6 trillion, with the Single-Family portfolio increasing 2% and the Multifamily portfolio rising 5%.

Credit Risk Management

Freddie Mac continues to actively manage credit risk through various credit enhancement programs. At the end of the first quarter, the company had credit enhancement coverage on 62% of its Single-Family mortgage portfolio and 93% of its Multifamily mortgage portfolio.

In the Single-Family segment, the serious delinquency rate increased to 0.59% as of March 31, 2025, compared to 0.52% a year earlier, primarily due to a higher serious delinquency rate for loans originated during 2022 and later, as well as lingering impacts from hurricanes in late 2024. The company’s allowance for credit losses on Single-Family loans was $6.9 billion at the end of the quarter.

For Multifamily, the delinquency rate increased to 0.46% at March 31, 2025, driven by an increase in delinquent floating-rate loans, including small balance loans in their floating-rate period. As of the end of the quarter, 98% of the delinquent loans in the Multifamily mortgage portfolio had credit enhancement coverage.

Segment Performance

Single-Family Segment The Single-Family segment reported net income of $2.3 billion, up 16% year-over-year. Net revenues increased 10% to $4.9 billion, primarily driven by a 6% rise in net interest income due to continued mortgage portfolio growth and lower funding costs, partially offset by lower yields on short-term investments.

The provision for credit losses in the Single-Family segment was $228 million, up from $120 million in the prior-year period, primarily due to a credit reserve build attributable to new acquisitions.

Multifamily Segment The Multifamily segment reported net income of $533 million, down 35% year-over-year. Net revenues declined 27% to $934 million, as non-interest income decreased 42%, primarily due to lower revenues from held-for-sale loan purchase and securitization activities, impacts from interest-rate risk management activities, and less favorable fair value changes from prepayment rates.

Liquidity and Capital Resources

Freddie Mac maintains a strong liquidity position, with $136.7 billion in its liquidity and contingency operating portfolio and $24.1 billion in unencumbered mortgage-related securities that can be pledged or sold for liquidity purposes.

The company’s primary funding sources are debt of Freddie Mac and debt of consolidated trusts. As of March 31, 2025, Freddie Mac had $184.7 billion in aggregate indebtedness pursuant to the Purchase Agreement, which was below the current $270.0 billion debt cap limit.

Freddie Mac’s regulatory capital position remains challenged, with a Common Equity Tier 1 (CET1) capital deficit of $29.5 billion and a Tier 1 capital deficit of $15.3 billion as of March 31, 2025. The company’s risk-based capital ratios were also below the regulatory minimums, with a Total capital ratio of -0.3% and a CET1 capital ratio of -2.7%.

Outlook and Risks

Freddie Mac’s future remains uncertain, as the company continues to operate under the conservatorship of the Federal Housing Finance Agency (FHFA). The conservatorship and related matters significantly affect the company’s management, business activities, financial condition, and results of operations.

Key risks facing Freddie Mac include:

• Uncertainty around future changes to the company’s business model during or following conservatorship
• Potential actions by the federal government, including FHFA, Treasury, and Congress, that may affect the company’s operations and access to affordable and sustainable housing
• Changes in economic and market conditions, including interest rates, inflation, and house prices
• Ability to maintain adequate liquidity and capital resources to avoid receivership
• Successful execution of business strategies and implementation of significant changes
• Effective management of mortgage credit risk and interest-rate risk
• Reliance on third-party service providers and potential cybersecurity incidents

Overall, Freddie Mac’s first-quarter 2025 results demonstrate the company’s continued efforts to support the U.S. housing market and provide liquidity, stability, and affordability. However, the company’s long-term outlook remains uncertain due to the ongoing conservatorship and the various risks it faces.