BiggerPockets Daily What Might Happen If Freddie Mae and Freddie Mac Go Private
Feb 10, 2025
The push to privatize Fannie Mae and Freddie Mac could reshape the housing market. Explore the agencies' roles and how their government backing influences mortgage rates. Privatization might bring both risks and rewards, potentially spiking mortgage costs while impacting affordability. Discover the implications for Wall Street and whether this move will stabilize or disrupt the mortgage industry. Tension brews over the balance of financial safety and market competition as key players weigh in on this pivotal change.
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Mortgage Rate Risk
- Privatizing Fannie Mae and Freddie Mac could increase mortgage rates due to higher investor risk.
- This would impact current 7% rates and projections for the year.
Market Disruption and Uncertainty
- Privatization could disrupt the housing finance system due to Fannie and Freddie's market dominance.
- Their shift in behavior post-privatization (overly aggressive or conservative) is uncertain.
Current System vs. Unknown
- The current system, though not perfect, functions, while privatization's outcome is unknown.
- The stability of the 2010s and 2020s might be attributed to government involvement, despite criticism.