Freddie Mac is seeing declines across the board, according to Freddie Mac’s Q1 2017 Financial Results released on Tuesday. The GSE saw lower single-family revenues, purchase volume, and mortgage-related investments. Still, the agency will pay $2.2 billion in dividends to the U.S. Treasury for the quarter.
According to Freddie, the slow start can be attributed to steady interest rates and reduced market-related gains.
“Our strong first quarter results, as the impact of moves in interest rates and market spreads was near zero, show how Freddie Mac is better serving its mission to responsibly provide liquidity, stability, and affordability to the nation’s mortgage markets, and doing so in a taxpayer efficient manner,” said Donald Layton, CEO of Freddie Mac.
In total, the agency reported a net income of $2.2 billion for Q1—a dip of $2.4 million over Q4 2016. Comprehensive income also fell for the quarter, declining from $3.9 billion in Q4 to $2.2 billion to start the year, and net interest income dropped 2 percent. A “solid business environment” and “the company’s growing guarantee businesses” helped to offset these declines, according to the report.
Freddie’s total book of guarantee business rose by 6 percent over the last year, reaching $1.9 trillion this quarter.
“We did this by improving the technology, products, and level of service provided to our lender customers,” Layton said. “This enables them, in turn, to responsibly and sustainably provide more competitive pricing and terms to a growing range of homeowners and renters. At the same time, we continue to innovate in transferring mortgage credit risk to private capital markets.”
Broken down, Freddie’s single-family guarantee portfolio far outpaced its multi-family holdings; the two jumped by 28 percent and 4 percent over the year, respectively.
“Single-family Guarantee business transferred a significant portion of the credit risk on approximately $65 billion of loans in the first quarter of 2017,” Freddie’s report stated. “The company has now transferred a portion of credit risk on nearly 30 percent of the total outstanding single-family credit guarantee portfolio, up from 22 percent at the end of the first quarter of 2016.”
The agency’s total mortgage-related investments portfolio declined by $7 billion—a 14 percent drop. This is a part of the agency’s wider efforts to reduce this portfolio as required by the Federal Housing Finance Agency n the U.S. Treasury.
Read the full earnings report at FreddieMac.com.