Introduction & Market Context
Freddie Mac (OTC:FMCC) released its first quarter 2025 financial results on May 1, showing stable performance amid challenging market conditions. The mortgage giant reported a net income of $2.8 billion, up 1% year-over-year, while operating in an environment where 30-year mortgage rates remained elevated at 6.65% as of March 31, 2025.
The company’s stock price remained unchanged at $5.18 following the announcement, though it has shown remarkable market performance with a 325% return over the past six months according to market data. National home prices increased by an average of 3.0% over the past year, providing a supportive backdrop for Freddie Mac’s operations.
Quarterly Performance Highlights
Freddie Mac reported net revenues of $5.9 billion for Q1 2025, representing a 2% increase from the same period last year. This growth was primarily driven by higher net interest income, which rose 7% year-over-year to $5.1 billion, partially offset by lower non-interest income, which declined 25% to $750 million.
As shown in the following chart of quarterly financial performance, the company has maintained relatively consistent revenue and income levels over the past five quarters:
The company’s net worth stood at $62.4 billion as of March 31, 2025. Under its conservatorship agreement, Freddie Mac will not be required to pay dividends to the Treasury until it has built sufficient capital to meet regulatory requirements. To date, the company has paid $119.7 billion in cumulative dividends to Treasury against $71.6 billion in draws.
Mortgage Portfolio Analysis
Freddie Mac’s total mortgage portfolio increased 3% year-over-year to $3.6 trillion, driven by growth in both its Single-Family and Multifamily segments. The Single-Family mortgage portfolio grew 2% to $3.1 trillion, while the Multifamily portfolio showed stronger growth of 5%, reaching $467 billion.
The following chart illustrates the steady expansion of Freddie Mac’s mortgage portfolio over the past five quarters:
In the Single-Family segment, which represents the bulk of Freddie Mac’s business, net revenues were $4.9 billion in Q1 2025, with net income of $2.3 billion. New business activity totaled $156 billion in unpaid principal balance (UPB), with home purchases accounting for $78 billion of that amount.
The comprehensive performance of the Single-Family segment is detailed in the following chart:
The Multifamily segment showed continued strength, with a 5% year-over-year increase in its mortgage portfolio. New business activity in this segment was $10 billion in Q1 2025, down from the exceptional $30 billion recorded in Q4 2024 but in line with historical quarterly averages.
Credit Quality and Risk Management
Freddie Mac has maintained strong credit quality across its portfolio. In the Single-Family segment, the weighted average original credit score for new loans remained high at 753-756 throughout the past five quarters. The weighted average original loan-to-value ratio stayed consistent at 77-78%.
The following chart shows the credit characteristics of Single-Family loan purchases:
Delinquency rates have remained relatively stable, with the seriously delinquent rate at 0.96% as of Q1 2025, equal to the rate from Q1 2024. The one-month past due rate was 0.59%, and the two-months past due rate was 0.26%.
The company continues to transfer credit risk to private investors, with $63 billion in UPB covered by new Credit Risk Transfer (CRT) issuance in Q1 2025. Overall, 62% of the Single-Family mortgage portfolio had some form of credit enhancement as of March 31, 2025.
In the Multifamily segment, credit quality metrics also remained strong. The weighted average original debt service coverage ratio stayed near 1.3x, indicating that property income comfortably exceeds debt obligations. Credit risk transfer remains a key strategy in this segment as well, with $18 billion in UPB covered by new CRT issuance in Q1 2025.
Housing Market Support and Outlook
Freddie Mac continues to fulfill its mission of supporting affordable housing. In Q1 2025, the company helped 313,000 families buy, rent, or refinance homes. Notably, 52% of single-family loan purchases supported first-time homebuyers, and 92% of rental units financed were affordable to middle-income renters.
The following chart illustrates Freddie Mac’s housing market support activities:
Looking ahead, Freddie Mac anticipates regulatory changes that will enhance its loan acquisition capabilities. The company is focused on investing in critical technology and increasing liquidity in both single-family and multifamily markets.
Jim Whitlinger, CFO of Freddie Mac, emphasized the company’s role in supporting housing affordability, stating, "We helped 313,000 families across the nation buy, rent or refinance a home." He also highlighted the company’s strategic focus under FHFA Director Bill Pulte, saying, "Director Pulte has challenged us to create a more affordable US housing system."
While Freddie Mac faces challenges from high interest rates and potential regulatory changes, its steady financial performance and growing mortgage portfolio position it well to continue supporting the U.S. housing market in the coming quarters.
Full presentation:
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