Freddie Mac Discount Notes: Fill & Download for Free

Freddie Mac is the nickname for the Federal Home Loan Mortgage Corporation, a government-sponsored entity that was created in 1970 to buy home mortgages on the secondary market, package them into “mortgage-backed securities,” and resell them to investors. Freddie Mac was created to be an equivalent competitor to the Federal National Mortgage Association (Fannie Mae), which was created in 1938 to stimulate home ownership by making a market for mortgage-backed securities.Their offerings include:Debt Products:Discount notes, reference bills & notes, medium-term notes, Structured Agency Credit Risk (STACR) debt notes, subordinated debtMortgage Products:Gold Participation Certificates (PCs), Giant PCs, ARM PCs, Real Estate Mortgage Investment Conduits (REMICs), Stripped Giant Certificates (Strips), Multi-Family mortgage products such as K DealsSeasoned Loan Offerings:Securitized Seasoned Performing Loans (SPLs), Re-performing Loans (RPLs), Non-performing Loans (NPLs)Typical investors are money managers, hedge funds, real estate investment trusts (REITs), and insurance companies. These firms have the knowledge to assess risk / return and assess how different classes of debt packages might fit into their overall investment portfolios.Sources:Freddie Mac - WikipediaFreddie Mac Home

Thanks for the A2A.Quantitative Easing is a policy instrument to ease the transmission of monetary policy. It considers impaired assets prevent financial firms’ normal market behaviour and institutes a buyer of last resort that purchases liquid securities within a certain market. Highly rated securities are typically sold at low discounts; by further lowering that discount, other more risky securities become more interesting investments. If QE also sees the purchase of riskier securities, that effect is Central Bank-led rather than market-led.Asset purchase programmes - ECBFRB: Press Release--Federal Reserve announces it will initiate a program to purchase the direct obligations of housing-related government-sponsored enterprises and mortgage-backed securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae--November 25, 2008Please note that inflation is, in both cases, a secondary objective.

Home mortgage rates track the Mortgage Backed Securities (MBS). These are the mortgages purchased by Fannie Mae and Freddie Mac that have been securitized into a type of bond. The price of the MBS moves in the same way that other kinds of bonds do; when there is more buying pressure, their price goes up. The converse is also true.Mortgage lenders pay close attention to the spot price of the MBS because that tells them what they’ll be able to sell their loans for on any particular day. They typically move up or down 15- 20 basis points on any one day (a basis point is .01%, or $.01 per $100 of coupon value.We see the daily movement in rates on rate sheets in the form of discount points or rebate for each rate. If the MBS move up 25 bps in one day, the next day’s rate will show a “pricing improvement” of about the same amount. This means that if a 30-year fixed rate loan was priced at “par” (no discount points and no rebate), tomorrow the same rate will carry a rebate of about .25%.Here’s an example from a retail rate sheet. (Note: you should not construe this to be in any way a rate quote or offer to lend! This is for illustration purposes only)Here’s a section of a rate sheet from last week:A 4.25% rate would produce a rebate to the borrower of .194%—$776 for a $400,000 loan. The MBS market has been consistently improving since March 4, and this has led to a nice decrease in most mortgage rates.This is the daily MBS chart for the last 9 days. The green bars represent days where they closed higher, red lower. The result of this MBS rally looks like this (rates from 4/12/17):The same 4.25% rate that had a rebate of .194% is now at .849%—so that same $400,000 loan would get a rebate of $3,396—or the borrower could simply select a lower rate.The MBS tend to parallel the 10- and 30-year Treasuries (although they will often diverge). Many people track the Treasuries rather than MBS because you can find the price of Treasuries on any financial website. For MBS, you have to subscribe to a quote service.When you refer to “interest rates,” I presume you are referring to the Federal Funds rate, which is set by the Federal Reserve’s Fed Open Market Committee. Mortgage rates will often drop when the Fed announces a rate increase. The reason for this is that a rate increase is intended to keep inflation in check—and inflation makes fixed-income investments like MBS less desireable.I hope this is clear.