Freddie Mac has recently been in the news due to rising mortgage rates, which have reached their highest levels since late November 2023. This increase in borrowing costs has significantly impacted homebuyers, pushing many to the sidelines during a traditionally busy housing market. Experts predict that mortgage rates will remain above 6%, contributing to a decline in housing affordability across the U.S. and other nations, as highlighted by IMF data. The current economic climate, characterized by soaring yields on government bonds and a strong dollar, has further complicated the housing landscape.
The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, is a public government-sponsored enterprise (GSE) established in 1970 to enhance the liquidity and stability of the U.S. housing market. Headquartered in Tysons Corner, Virginia, Freddie Mac plays a crucial role in the mortgage market by purchasing loans from lenders, thereby providing them with capital to issue more mortgages. This process helps to lower borrowing costs for consumers and promotes homeownership. Freddie Mac is also known for its involvement in the secondary mortgage market, where it securitizes loans into mortgage-backed securities.
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As Donald Trump resumes the presidency, markets react with volatility amid concerns over inflation and interest rates. Strong employment data has diminished expectations for Federal Reserve rate cuts, while rising bond yields reflect investor anxiety about potential tariffs and immigration policies. The economic landscape remains precarious as Trump takes office.
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In 2024, first-time homebuyers in the U.S. faced significant challenges, with only 24% of purchases attributed to them, the lowest since 1981. High mortgage rates and sticky home prices hindered their entry into the market, despite some signs of improvement in affordability and inventory levels.
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Recent inflation reports from the US and UK indicate rising consumer prices, with the US seeing a 2.8% increase in December and the UK reporting a slight decline to 2.5%. These trends raise concerns about the Federal Reserve's interest rate policies and potential economic impacts under President-elect Trump's proposed tariffs.
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As of January 16, 2025, the average rate on a 30-year mortgage reached 7.09%, the highest since May. This increase exacerbates affordability challenges for homebuyers amid rising home prices and limited inventory. The Federal Reserve's ongoing battle with inflation complicates the housing market further.
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Rockford, Illinois, has been named the hottest housing market in the U.S. for December 2024, surpassing Manchester, New Hampshire. The city's affordability and rapid home sales have attracted buyers, with median prices rising 21% year-over-year, while the national market has slowed due to high mortgage rates.