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Our Competition in the Market

Freddie Mac and Fannie Mae Face Greater Competition

According to OFHEO's new research report, the GSEs' share of the market for fixed- and adjustable-rate loans last year declined:

  • The combined purchases of conventional, non-jumbo mortgages by Freddie Mac and Fannie Mae in 2004 represented 40 percent of originations of those mortgages, down from 66 percent in 2003
  • The GSEs' combined purchases of non-jumbo fixed-rate mortgages represented 47 percent of originations of those loans in 2004, down from 70 percent in 2003
  • GSE purchases of conventional, non-jumbo ARMs represented 25 percent of originations of those loans in 2004, down from 43 percent in 20031

Some have suggested that because of our GSE status, Freddie Mac faces little or no competition in the portion of the residential mortgage market we serve. In reality, mortgage market competition is fierce. When times are good – like they are right now – there is no shortage of investors eager to purchase mortgages. No lender is compelled to sell its mortgages to Freddie Mac. Like any other company, Freddie Mac must earn its business by offering a competitive deal.

Freddie Mac faces strong competition from several sources:

  • Fannie Mae: The two companies fiercely compete with each other in buying and guaranteeing mortgages.
  • Other mortgage investors and risk guarantors, such as banks and other lenders
  • Large mortgage aggregators that buy loans from other lenders
  • The Federal Home Loan Banks
  • The Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA), which provide federal government backing on mortgages
  • Private-label mortgage-backed issuers and private firms that insure pools of mortgages that go into mortgage-backed securities issued by Freddie Mac or other market participants

Some have suggested that because of our GSE status, Freddie Mac faces little or no competition in the portion of the residential mortgage market we serve. In reality, mortgage market competition is fierce.

As in other markets, competition benefits the mortgage market by giving consumers more choices.

Not only does Freddie Mac face strong competition in the mortgage market, Freddie Mac helps promote competition in the primary market by providing a secondary market outlet for thousands of mortgage originators nationwide.

1 Office of Federal Housing Enterprise Oversight (OFHEO). "Single-Family Mortgages Originated and Outstanding: 1990-2004." July 13, 2005.


© 2008 Freddie Mac