Increase in Freddie Mac Earnings Driven by Release of Credit Reserves

Freddie Mac has wrapped up a robust first half of 2026 with the announcement of its financial results for Q2. The government-sponsored mortgage investor reported a net income of $3.8 billion for the quarter, reflecting a 61% increase compared to the same period last year.

This growth was primarily attributed to what the company referred to as a “credit reserve release in the current period, in contrast to a credit reserve build in Q2 of 2025.” These results come on the heels of a recovery in Q1, which was bolstered by a significant rise in refinance activity. Freddie Mac had concluded 2025 with a 14% year-over-year decline in Q4.

As of June 30, the company announced a net worth of $78 billion, reflecting a 5.4% rise from the first quarter and a 20% increase compared to the previous year. In comparison to two years ago, this represents a 46.6% growth from Freddie’s net worth of $53.2 billion recorded at the conclusion of the second quarter of 2024.

“Freddie Mac delivered strong second quarter financial results, reflecting the strength of the business, and disciplined execution against our priorities,” said Bill Pulte, Chair of Freddie Mac’s Board of Directors and the Director of the Federal Housing Finance Agency (FHFA). He said the net income was “driven by strong revenues, a credit benefit and continued cost discipline.”

Net revenues reached $6 billion, reflecting a 1% increase compared to the previous year, which was “primarily driven by higher net interest income, partially offset by lower non-interest income (loss).”

Net interest income stood at $6 billion, marking a 13% year-over-year increase. Freddie attributed this growth to the “increase in the balance of fully guaranteed securitizations in the Multifamily mortgage portfolio due to the change in Multifamily business strategy and continued mortgage portfolio growth in Single-Family.” Overall, the mortgage portfolio totaled $3.7 trillion at the end of the quarter, representing a 2.7% increase from $3.6 trillion at the conclusion of Q2 of 2025.

Kenny Smith, the CEO of Freddie Mac, provided an analysis of the results.

“In the second quarter, together with lenders of all sizes, we helped nearly 439,000 households buy, refinance or rent a home, including 97,000 first-time homebuyers,” Smith said. “Nearly 91% of the rental units and 54% of the single-family homes we supported were affordable to families earning 120% or less of area median income.”

Additional Findings:

Mortgage rates were artificially lowered following President Donald Trump’s announcement in early January, where he instructed Fannie Mae and Freddie Mac to acquire up to $200 billion in mortgage bonds.

This action reduced secondary spreads and led to rates decreasing to the high-5% range by mid-February. In recent weeks, the average mortgage rates for 30-year fixed-rate mortgages have remained around 6.35%, influenced by the volatility from the Iran war and inflationary pressures over the past two months.

However, as experts warned to Scotsman Guide, the federal government’s initiative to lower mortgage borrowing costs has primarily resulted in an increase in refinance activity rather than stimulating demand for home purchases, amidst a widespread and ongoing affordability crisis.

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