From Yahoo Finance: 2025-03-30 10:48:00

Fannie Mae and Freddie Mac shares surged after Trump administration hints at privatization. Experts warn privatization may raise mortgage rates. The companies play a vital role in lending by buying up mortgages. Investors’ confidence in mortgage bonds keeps borrowing costs low. Privatization challenges include maintaining government backing to avoid higher borrowing costs.

Treasury Secretary links Fannie and Freddie release to mortgage rates. Their conservatorship began in 2008 during the financial crisis. Experts warn against releasing them without a government guarantee. Privatization may raise rates by up to 40 basis points. Without a guarantee, rates could jump 1.5 percentage points. A government backstop could result in lower rates.

Experts advocate for an explicit guarantee before release. Congress must act for a formal government backing. Any release plan will require time and attention. The Mortgage Bankers Association pushes for a conservatorship exit with a guarantee. The complexities and money involved will be a significant challenge to address.



Read more at Yahoo Finance: Privatize Fannie and Freddie without making mortgages more expensive