Freddie Mac reported net income of $3.8 billion for the first quarter of 2022, a 37% year-over-year increase, even as purchase and refinancing activity continued to decline.
The company’s net worth soared to $31.7 billion, up nearly $13 billion from the same period last year. Its single-family mortgage portfolio now stands at $1.9 trillion, a 17% year-over-year increase, due to home price appreciation and strong buying activity of houses.
“Freddie Mac delivered a strong first quarter performance, with net income topping both the first and fourth quarters of 2021,” said Freddie Mac CEO Michael DeVito. “We remain intensely focused on our broad mission, with an emphasis on promoting greater equity and sustainability.”
Underwriting fee revenue was down significantly from the fourth quarter. In the first quarter of 2022, Freddie Mac took in just $70 million in collateral revenue, down $180 million year-over-year. This decrease was more than offset, however, with investment gains totaling $1.5 billion, an increase of nearly 300% from the previous quarter.
Net income for single-family families totaled $3.4 billion, an increase of $1.2 billion from the previous quarter and $1.7 billion more than the same period last year. This increase was due to higher net interest income from growth in the mortgage portfolio, higher average portfolio guarantee fee rates and higher net investment gains.
Single-family home net income was also supported by house price appreciation and higher expected house prices, leading to higher credit loss earnings, the company said.
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The average loan size for the purchase of a single-family home supported by Freddie Mac in the first quarter reached $300,000, due to a higher conforming loan limit and an appreciation in the price of real estate, according to documents filed by the company. The weighted average credit score for all loans bought or guaranteed by Freddie Mac in the first quarter was 746, lower than its five-year high of 760, the average credit score for loans it backed in 2020.
The volume of refinancing supported by Freddie Mac was less than half the level of refinancing a year ago. In the first quarter of 2022, Freddie Mac backed $114 billion in refinances, less than half of the $273 billion in refinances it reported in the first quarter of 2021. Purchase volume for the first quarter, at $93 billion, was slightly down from the previous quarter. purchase volume of 111 billion dollars.
Freddie Mac said part of that slippage was due to a decline in its share of the overall market for government-sponsored companies.
“Our loan purchase and guarantee activity declined primarily due to a decrease in refinance volume, driven by an increase in mortgage interest rates and a decrease in our share of GSE volume,” the company said. in its quarterly report.
Nearly half of new single-family home loans backed by Freddie Mac in the first quarter were for first-time buyers.
Although not mentioned in Freddie Mac’s first quarter results, the day before the FHFA released Fannie Mae and Freddie Mac’s duty to serve the plans of underserved markets. Freddie Mac’s plan included a numeric goal for manufactured home furniture loan purchases by 2024, though the company doesn’t yet have a product to make those purchases, and implementing it would require approval from its curator.
In a statement, Mike Hutchins, president of Freddie Mac, called the plan “comprehensive and enduring.”
“We welcome the opportunity to do more,” Hutchins said.
