Freddie Mac Mortgage Portfolio Surges Amid Rate Uncertainty

Freddie Mac’s December 2025 Monthly Volume Summary, released just days ago, paints a revealing picture of the current mortgage market—a landscape shaped by robust portfolio growth, subtle shifts in credit performance, and an evolving relationship with interest rates. The report, combined with the Federal Reserve’s recent policy decisions and expert analysis, offers homebuyers, investors, and policymakers a window into the forces steering the U.S. housing finance system as 2026 gets underway.

According to Freddie Mac, its total mortgage portfolio ended December 2025 at an eye-popping $3.674 trillion, marking a 6.5% annualized growth rate for the month. Year-to-date, the company reported roughly $467 billion in gross portfolio activity, underscoring a year of steady expansion in conventional mortgage loan holdings. The mortgage-related investments portfolio—comprising both agency and non-agency securities along with mortgage loans—also grew, finishing December at about $139 billion. That figure reflects a remarkable 37.9% annualized growth rate, a testament to Freddie Mac’s ongoing commitment to broadening its presence in mortgage-backed securities (MBS).

But what’s behind this expansion? The backdrop is a U.S. economy that, according to the Federal Reserve’s Federal Open Market Committee (FOMC), has been "expanding at a solid pace." On January 28, 2026, the FOMC opted to hold interest rates steady at 3.5% to 3.75%. Their reasoning? "Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated," the committee stated. This decision followed three consecutive 25 basis point cuts to the federal funds rate in September, October, and December 2025, moves that were widely anticipated and closely watched by mortgage market participants.

So, are mortgage rates set to tumble now that the Fed has paused its rate cuts? Not quite, say the experts. Chen Zhao, head of economics research at Redfin, predicted, "Mortgage rates will stay where they are as the Fed keeps rates unchanged, as anticipated. The Fed said it doesn’t expect to resume cuts for the foreseeable future, as they don’t see a reason to do so." Zhao added, "After cutting the Fed Funds rate by 75 bps in Q4, the Fed will likely hold rates steady until at least this summer as they wait for more economic data. Mortgage rates are unlikely to change much."

The Fed’s current stance means mortgage rates are hovering near what economists call the neutral level—the point where monetary policy neither spurs nor restrains growth. Redfin’s analysis suggests the risk of a recession has receded, and so has the risk of higher inflation. "That means Fed policy this year is likely to hold rates where they are," Zhao wrote. The real drama, she noted, may be around the Fed’s independence and the question of who will be its next chair, though little new information has emerged on those fronts.

For many would-be homeowners, the link between the Fed’s policy rate and mortgage rates is a source of confusion. The Federal Reserve Bank of Atlanta recently tackled this misconception head-on. "A time-honored, but flawed, assumption about the relationship between mortgage rates and interest rates has been turned on its head as the two have moved in opposite directions following the Federal Reserve’s interest rate cuts over the past year," the Atlanta Fed wrote. Economists Kris Gerardi and Domonic Purviance explained, "For the past 20 years, mortgage rates have been more closely associated with the interest paid on 10-year Treasury notes than with the fed funds rate set by the FOMC." Gerardi added, "While mortgage rates do, typically, move fairly closely with short-term interest rates like the fed funds rate, they are more strongly linked to longer-term rates such as the 10- or 20-year Treasury yield. This is because the average life of a mortgage is around seven to 10 years."

The data backs up this view. Between September 2024 and January 2025, the 10-year Treasury yield climbed by about 90 basis points, even as the federal funds rate fell by roughly 80 basis points. After the Fed’s half-point reduction in September 2024—its first cut since 2020—mortgage rates actually rose from 6.09% to 6.84% between September 19 and November 21, before eventually easing. Similarly, when the Fed lowered rates by a quarter-point in September 2025, mortgage rates edged higher, rising from 6.26% on September 18 to 6.34% by October 2, then receding as the weeks passed.

Freddie Mac’s own Primary Mortgage Market Survey, released January 22, 2026, offers a snapshot of the current rate environment. "The 30-year FRM (fixed-rate mortgage) averaged 6.09% as of Jan. 22, 2026, up from last week when it averaged 6.06%. A year ago at this time, the 30-year FRM averaged 6.96%," the report noted. The 15-year FRM averaged 5.44%, up from 5.38% the previous week, and down from 6.16% a year ago. Sam Khater, Freddie Mac’s chief economist, had some advice for aspiring homebuyers: "With the economy improving and the average 30-year fixed-rate mortgage nearly a percentage point lower than last year, more homebuyers are entering the market. Buyers always should shop around for the best rate, as multiple quotes can potentially save them thousands."

Turning back to Freddie Mac’s December report, credit quality metrics remained largely stable despite the shifting rate environment. The single-family delinquency rate ticked up slightly from 0.58% in November to 0.59% in December, while the multifamily delinquency rate declined from 0.48% to 0.44%. These figures, according to Freddie Mac, are near historically low levels and signal continued resilience in core loan products. The company’s exposure to Fannie Mae-issued backed securities re-securitized by Freddie Mac stood at about $98 billion as of December 2025, reflecting a significant footprint in the secondary market.

Risk management, as always, remains top of mind. Freddie Mac’s exposure to interest rate risk and its duration gap are ongoing considerations, especially as the company continues to operate under Federal Housing Finance Agency conservatorship—a status in place since the 2008 financial crisis. The conservatorship has shaped Freddie Mac’s strategic approach, balancing growth with prudence as it navigates ever-changing market conditions.

All told, the latest data from Freddie Mac and the Federal Reserve reveals a mortgage market in flux, but not in crisis. Portfolio growth is robust, credit performance is steady, and mortgage rates, while influenced by a complex web of factors, remain within a range that’s drawing buyers back into the market. For those hoping to buy a home in 2026, the message is clear: pay attention to the broader economic currents, shop around for the best rate, and don’t expect dramatic swings—at least for now.