GSE benefits from higher mortgage yields, driving net income growth
Freddie Mac today released its first quarter 2024 earnings, showcasing a 39% year-over-year jump in net income to $2.8 billion.
Net revenues rose 19% to $5.8 billion, fueled by net and non-interest income gains.
According to Freddie’s news release, its net interest income grew 6% to $4.8 billion, propelled by continued mortgage portfolio expansion and higher investment yields amid elevated interest rates. Non-interest income surged to $1.0 billion from $0.3 billion a year ago, largely due to multifamily investment gains.
“Freddie Mac had a solid first quarter, as the company continued to serve low- and moderate-income families despite persisting affordability challenges in the housing market,” said Michael Hutchins, president and interim chief executive officer of Freddie Mac. “In fact, 54% of single-family homes and 90% of rental units Freddie Mac financed in the first quarter were affordable to families earning at or below 120% of area median income.”
Freddie Mac noted a $0.2 billion provision for credit losses in the first quarter of 2024, mainly due to new acquisitions and rising mortgage interest rates. This provision is slightly down from the $0.4 billion reported in the first quarter of 2023.
The company's non-interest expenses increased by 10% to $2.1 billion, primarily due to higher expenses associated with Structured Agency Credit Risk (STACR) Trust note repurchases.
Read more: Fannie Mae, Freddie Mac update housing equity plans for 2024
In its single-family segment, Freddie Mac reported a net income of $1.9 billion, up 16% from last year. This segment also saw net revenues increase to $4.5 billion, up 6% year-over-year, with similar factors driving overall company revenue growth. This sector alone financed 194,000 mortgages, including helping 77,000 first-time homebuyers.
The multifamily segment also performed well, with net income increasing to $0.8 billion from $0.3 billion in the first quarter of 2023. Its revenues doubled to $1.3 billion, with significant contributions from non-interest income, driven by gains from interest-rate risk management and favorable activities in loan purchase and securitization.
Read next: Fannie Mae continues positive earnings streak into 2024
However, the delinquency rate in this segment rose to 0.34% from 0.13% year-over-year, primarily due to an increase in delinquent floating rate loans.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
