Citigroup warns that privatizing Fannie Mae and Freddie Mac could raise mortgage rates by 0.1 to 0.2 percentage points, costing borrowers an extra $600 a year. The Trump administration plans to re-list the companies, potentially increasing costs for home loans. Efforts to privatize face obstacles, including concerns over government support.

Investors in the agency MBS market remain confident in government backstopping of Fannie and Freddie. Pimco warns of potential disruptions without an explicit guarantee. Citigroup estimates guarantee fees could rise by 0.1 to 0.2 percentage points following privatization. Uncertainty remains over how the administration will privatize the companies and the impact on mortgage rates.

Key obstacles to privatization include the need for more capital and regulatory changes for Fannie and Freddie. Questions about their business model, capital rules, and investor demand remain. Industry observers note potential delays in privatization due to these issues. The administration must navigate complex regulations and market confidence to ensure a successful IPO for the companies.

Read more at Yahoo Finance: Pimco Warns Fannie-Freddie IPO to Drive Up Mortgage Rates Americans Pay