Freddie Mac 's Primary Mortgage Market Survey reported a six-week surge in mortgage rates, nearing 8%, as of Thursday, October 19, 2023. The 30-year and 15-year fixed-rate mortgages averaged 7.63% and 6.92% respectively, a significant increase from last year's rate of 6.94%.
In light of these developments and growing concerns about affordability, Freddie Mac's Chief Economist, Sam Khater, urged borrowers to shop for competitive rates and explore down payment assistance options. This advice is particularly pertinent for first-time homebuyers who are struggling with down payment barriers.
The surge in mortgage rates is also affecting the construction sector. Despite incoming data showing a rebound in new home construction in September 2023, Khater anticipates a short-term downturn in construction. This prediction is attributed to dwindling confidence among home builders as rising rates affect homeownership attainment.
InvestingPro's real-time data shows that Freddie Mac, also known as FMCC (OTC:FMCC), currently has a market cap of 1990M USD and a P/E ratio of 74.37. The company's revenue over the last twelve months (LTM2023.Q2) was 17.95B USD, despite a -20.91% revenue growth. However, the quarterly revenue growth for FY2023.Q2 was 15.28%. The company's stock has seen a large price uptick over the last six months, with a total return of 39.89%.
InvestingPro Tips also reveals that FMCC has high earnings quality, with free cash flow exceeding net income, and liquid assets that exceed short-term obligations. Despite a declining trend in earnings per share, analysts predict the company will be profitable this year. It's worth noting that the stock generally trades with high price volatility, and total debt has increased for consecutive years. These insights are part of a larger set of tips provided by InvestingPro, which can be accessed here. This information is particularly useful for investors looking to understand the financial health and potential risks associated with FMCC.
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