8-K: Freddie Mac Q3 2025 Net Income Dips to $2.8B Amid Credit Build

Freddie Mac reported a net income of $2.8 billion for the third quarter of 2025, an 11% decrease year-over-year, primarily due to a credit reserve build.

Summary

• Net income for the third quarter of 2025 was $2.8 billion, an 11% decrease from $3.1 billion in the third quarter of 2024.
• Net revenues for the quarter were $5.7 billion, down 2% year-over-year from $5.8 billion.
• The decrease in net income was primarily driven by a $0.2 billion provision for credit losses in the current period, compared to a $0.2 billion credit reserve release in the prior year period.
• Net interest income increased by 9% year-over-year to $5.5 billion, while non-interest income decreased by 66% to $0.3 billion.
• Freddie Mac helped 483,000 households buy, refinance, or rent a home in Q3 2025, including 106,000 first-time homebuyers.
• The total mortgage portfolio grew 2% year-over-year to $3.6 trillion as of September 30, 2025.
• Single-Family serious delinquency rate increased to 0.57% at September 30, 2025, from 0.54% at September 30, 2024.
• Multifamily delinquency rate increased to 0.51% at September 30, 2025, from 0.39% at September 30, 2024.
• New business activity for Single-Family was $99 billion, up from $98 billion in Q3 2024, and for Multifamily was $25 billion, up from $15 billion in Q3 2024.
• The company's net worth increased to $67.6 billion as of September 30, 2025, from $56.4 billion a year prior.
• Freddie Mac was not required to pay a dividend to Treasury in September 2025 as it continues to build capital to meet regulatory requirements.

Sentiment

Score: 4

Explanation: The sentiment is mixed to slightly negative. While Freddie Mac continues to fulfill its mission and shows growth in its mortgage portfolio and net interest income, key financial metrics like net income and net revenues declined year-over-year. The shift from a credit reserve release to a credit reserve build, coupled with rising delinquency rates in both segments, indicates increasing credit risk and a less favorable operating environment compared to the prior year.

Positives

• Net interest income increased by 9% year-over-year to $5.5 billion, driven by mortgage portfolio growth and lower funding costs.
• The total mortgage portfolio grew 2% year-over-year to $3.6 trillion, indicating continued market presence and activity.
• Freddie Mac supported 483,000 households in Q3 2025, including 106,000 first-time homebuyers, fulfilling its mission.
• 54% of eligible Single-Family loans and 92% of eligible Multifamily rental units were affordable to lowto moderate-income families.
• Multifamily new business activity significantly increased to $25 billion in Q3 2025, up from $15 billion in Q3 2024.

Negatives

• Net income decreased by 11% year-over-year to $2.8 billion.
• Net revenues decreased by 2% year-over-year to $5.7 billion, primarily due to lower non-interest income.
• A provision for credit losses of $0.2 billion was recorded in Q3 2025, contrasting with a credit reserve release of $0.2 billion in Q3 2024, indicating a less favorable credit outlook.
• Non-interest income declined significantly by 66% year-over-year to $0.3 billion, mainly due to Single-Family segment performance.
• Single-Family serious delinquency rate increased to 0.57% at September 30, 2025, from 0.54% at September 30, 2024.
• Multifamily delinquency rate increased to 0.51% at September 30, 2025, from 0.39% at September 30, 2024, driven by delinquent floating rate and small balance loans.

Risks

• Changes in economic and market conditions, including house prices, liquidity, and mortgage spreads, could materially affect results.
• Actions by the U.S. government (FHFA, Treasury, Congress) and state/local governments, as well as changes in Federal Reserve fiscal and monetary policies, could impact operations.
• The impact of any downgrade in Freddie Mac's credit ratings or those of the U.S. government poses a risk.
• Legislative and regulatory developments, including new or amended accounting guidance, could alter financial performance.
• The credit quality of loans owned or guaranteed by the company could deteriorate.
• Banking crises or failures, natural disasters, or catastrophic events could negatively affect business, results of operations, and financial condition.

Future Outlook

Freddie Mac is actively looking at ways to help drive more homebuilding in both the multifamily and single-family markets to address the country's supply needs. The company continues to operate under conservatorship and is focused on building sufficient capital to meet the Enterprise Regulatory Capital Framework requirements, which will determine when dividend payments to Treasury resume.

Management Comments

• "In the third quarter, Freddie Mac earned $2.8 billion of net income on $5.7 billion of revenue as we worked to restore the American Dream for families across the country."
• "In doing so, we helped 483,000 Americans buy, refinance or rent a home, including 106,000 first time homebuyers."
• "But we are not resting on these results. The country needs more supply, and we are looking closely at ways to help drive more homebuilding in both the multifamily and single-family markets."
• "At Freddie Mac, we will never stop working to make housing great again."

Industry Context

The housing market saw national home prices increase by an average of 1% over the past year. Mortgage rates experienced some fluctuation, with the 30-year mortgage rate at 6.30% at quarter-end, down from 6.85% at the end of 2024 but up from 6.08% a year prior. Freddie Mac's continued focus on affordability and supporting first-time homebuyers aligns with broader efforts to address housing accessibility challenges amidst evolving interest rate environments and supply constraints.

Comparison to Industry Standards

• Freddie Mac's Multifamily delinquency rate of 0.51% at September 30, 2025, is lower than the 0.74% delinquency rate for FDIC insured institutions (90+ day) as of June 30, 2025.
• Freddie Mac's Multifamily delinquency rate of 0.51% is significantly lower than the 3.47% delinquency rate observed in the MF CMBS market (60+ day) at September 30, 2025, indicating stronger credit performance relative to broader commercial mortgage-backed securities.

Stakeholder Impact

• Shareholders: Common stockholders continue to be impacted by the conservatorship, with no dividend payments and capital being built towards regulatory requirements rather than distributed.
• Homebuyers and Renters: Freddie Mac's continued financing activities provide liquidity and support affordability, particularly for lowto moderate-income families and first-time homebuyers.
• U.S. Treasury: No dividend payment was made to Treasury in Q3 2025 as the company builds capital, impacting potential government revenue from Freddie Mac.

Next Steps

• Continue efforts to build sufficient capital to meet the Enterprise Regulatory Capital Framework (ERCF) requirements.
• Explore ways to help drive more homebuilding in both the multifamily and single-family markets to address housing supply needs.
• Host a conference call on October 30, 2025, to discuss the results with the media.

Key Dates

Recommendation

Given Freddie Mac's status under conservatorship, common stock shareholders do not receive dividends, and the company's primary focus is on building capital to meet regulatory requirements rather than maximizing shareholder returns in the traditional sense. While the company demonstrates operational stability, continued mission fulfillment, and government backing, the financial performance for common equity is constrained. For a seasoned investor, a 'hold' recommendation acknowledges the stability and government support but recognizes the limited upside potential for common stock under the current conservatorship structure.

Keywords

Freddie Mac, mortgage, housing, financial results, Q3 2025, net income, credit losses, conservatorship, single-family, multifamily, delinquency rates, housing affordability