What Freddie Mac Is:
Freddie Mac is the Federal Home Loan Mortgage Corporation, or FHLMC. It was created by the
Emergency Home Finance Act of 1970 to create a secondary market for
conventional mortgages. It then packages these into mortgage-backed securities, and resells them to investors in the stock market. It is listed on the NYSE.
What Freddie Mac Does:
Freddie Mac affects the U.S. economy by lowering interest rates, which makes more loans available to more new homeowners. For
example, lowering the rate from 8.5% to 8% allows 791,000 low- and moderate-income families to
buy homes.
Freddie Mac also makes interest rates more consistent. Across the nation's cities, mortgage rates
varied by as much as 1.7% in 1970. Today, that difference is only 0.1%.
Freddie Mac stimulates the housing market, which comprises 10% of the
economy. By doing so, it creates wealth for homeowners who receive greater equity from higher-priced
homes.
How Freddie Mac Affects You:
Freddie Mac lowers the interest rates on the mortgages you get from the bank. In fact, it estimates it
lowers the rate .5%, which translates to a $12,000 over the life of a $100,000 loan.
Freddie Mac also provides monthly housing market analyses. If you are thinking of buying or selling a home, take a look at their reports to get a better idea of what is happening in the real estate market, and to look at current interest rates.
