Just read an article about Freddie's 5-yr debt spread over treasury on WSJ.
It's now at 113 bps, a record. Freddie is paying about 4.17% on the debt,
but current market mortgage rate for conforming 5-yr is around 6.125%
for the best borrowers. This rate is higher than one year ago even though
Fed rate was 325 bps higher at that time. This means that Freddie/Fannie
are having higher profit margins on loan originated now (also with
much better underwriting standards)
There will be more short-term (1-2 years) pain in the real estate market
due to the high mortgage rate. But this will be necessary to bring
everything back on track in the long run.
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