FHLMC Outlines Year 2000 Expectations


Freddie Mac recently announced its expectations for business prospects for the year 2000 during a conference call for investors and equity analysts.

Mortgage-market activity is expected to slow slightly during the next year, with mortgage originations totaling slightly below $1 trillion, down from the anticipated record-breaking $1.3 trillion of 1999.

However, in mortgage-backed securities, Freddie Mac expects its portfolio to grow at a double-digit rate, due to slowing liquidations. The company also expects its credit losses will be lower than this year.

Freddie Mac Reopens Reference Note

Freddie Mac has priced the reopening of its five-year 6.25% bullet Reference Note due July 15, 2004. It was priced at 99.617 to yield 3.43%, or 44.5 basis points over the on-the-run five-year Treasury. This brings the total outstanding debt to $6 billion, an increase of $3 billion. Settlement will be Nov. 12, and the next coupon payment is due Jan. 15, 2000. Goldman, Sachs & Co., J.P. Morgan and Merrill Lynch & Co. served as joint leaders for the transaction, along with seven co-lead managers and a selling group. The note was well received by the market, according to sources at Freddie Mac.

This note will bring total issuance for Freddie Mac to $44.5 billion of Reference Notes and $5.75 billion of outstanding Callable Reference Notes in 1999.

Fannie Mae's October Numbers

Separately, while Fannie Mae's net interest margin and delinquency rates on single-family mortgages remained unchanged from August to September, its mortgage purchases and mortgage securities outstanding increased.

Fannie Mae committed to buy $8.8 billion of mortgages during October, up from $7.4 billion in September. Its mortgage securities outstanding rose $946.3 billion, a $7.8 billion increase. However, the annualized growth rate for the securities was only 10%, down from September's $11.6%.

Its portfolio liquidations fell to $4.5 billion, from $4.9 billion in September. The company also created $17.5 billion of mortgage-backed securities, down from $20.4 billion in September.

Fannie Mae's net interest margin remained unchanged at 100 basis points, and the delinquency rate was .49% in September, unchanged from August. Multifamily delinquency rates fell to a record low .12% in September, down from .15% in August.