Freddie Mac (FMCC) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $2.8 billion, down 6% year-over-year, mainly due to a credit reserve build versus a release last year, partially offset by higher net revenues.

• Net revenues rose 12% year-over-year to $6.0 billion, driven by higher net interest and non-interest income.

• Net worth increased to $53.2 billion as of June 30, 2024, up 27% year-over-year.

• Financed 349,000 households, including 257,000 mortgages (53% affordable to low- to moderate-income families) and 92,000 rental units (93% affordable to low- to moderate-income families).

• Total mortgage portfolio grew 2% year-over-year to $3.5 trillion, with Single-Family at $3.1 trillion (+2%) and Multifamily at $447 billion (+5%).

Financial highlights

• Net interest income was $4.9 billion, up 9% year-over-year, due to mortgage portfolio growth and lower hedge-related debt expense.

• Non-interest income increased 30% year-over-year to $1.1 billion, mainly from higher guarantee income and investment gains.

• Provision for credit losses was $394 million, reflecting a credit reserve build in Single-Family from new acquisitions.

• Non-interest expense decreased 3% year-over-year to $2.1 billion.

• Net interest yield increased to 0.60% from 0.56% in Q2 2023.

Outlook and guidance

• Management expects continued moderate growth in the mortgage portfolio, with new business activity remaining low.

• Multifamily new business activity is expected to remain subdued due to higher interest rates, but mission-driven affordable housing remains a focus.

• House price forecast revised to 0.6% growth over the next 12 months and 0.5% for the following 12 months.

• Regulatory and market changes, including new pilot programs and tenant protections, may impact future operations.

• Management remains focused on supporting homeownership and rental opportunities amid high mortgage rates and muted home sales.