The name Freddie Mac might sound distinctly American, but its legacy and operations offer a timely lens through which Australians can examine our own housing finance system. As the US faces fresh housing affordability challenges in 2025, Freddie Mac’s evolution holds valuable lessons for Australian borrowers, investors, and policymakers alike.
What is Freddie Mac and Why Does It Matter?
Freddie Mac—formally the Federal Home Loan Mortgage Corporation—is a government-sponsored enterprise (GSE) established in 1970 to expand the US secondary mortgage market. By buying mortgages from banks and packaging them as mortgage-backed securities (MBS), Freddie Mac injects liquidity into the housing market and helps keep borrowing costs lower for home buyers. The ripple effects of its activities are felt across the US property market, influencing everything from interest rates to credit standards.
- Liquidity: Freddie Mac gives lenders the ability to write more home loans, helping keep the market moving.
- Standardisation: It sets guidelines for the types of loans it will buy, shaping lending criteria nationwide.
- Risk Management: By spreading mortgage risk, Freddie Mac aims to stabilise the housing finance ecosystem.
For Australians, the sheer scale and structure of Freddie Mac offer a comparison point for our own mortgage market, where the ‘Big Four’ banks dominate and securitisation plays a growing—though less central—role.
Freddie Mac in 2025: New Policies, New Pressures
In 2025, Freddie Mac is contending with a US housing market under strain: mortgage rates remain elevated, inventory is tight, and homeownership affordability is a hot-button political issue. In response, Freddie Mac has rolled out new policies and products:
- Expanded Credit Criteria: In early 2025, Freddie Mac broadened its acceptance of alternative credit data, such as rent and utility payments, aiming to help first-home buyers and renters build a path to ownership.
- Affordable Housing Initiatives: The organisation has increased its commitment to funding for affordable housing, both via targeted MBS and by supporting multifamily developments in under-served regions.
- Green Mortgage Products: With ESG (environmental, social, and governance) factors front and centre, Freddie Mac now offers incentives for energy-efficient home upgrades and green-certified multifamily properties.
These moves are driven by both government mandates and market realities, as policymakers in the US seek to balance financial stability with social outcomes. The result: Freddie Mac’s reach continues to grow, but so does scrutiny of its risk management and public mission.
Lessons for Australia: Opportunities and Cautions
While Australia lacks a direct Freddie Mac equivalent, the Australian Office of Financial Management (AOFM) has played a bigger role since the GFC in supporting securitisation markets, and non-bank lenders have increasingly relied on mortgage-backed securities. The US experience offers several takeaways:
- Stabilising Force in Volatile Times: Freddie Mac’s countercyclical interventions—buying up more loans during downturns—helped steady the US market during crises. Australia’s AOFM played a similar role during COVID-19, and may need to again if rates or unemployment spike.
- Risks of Overreach: Freddie Mac’s expansion into riskier loan categories contributed to the 2008 housing crash. Australia’s regulators have kept a tighter leash, but as non-bank lenders grow, ongoing vigilance is needed to avoid US-style pitfalls.
- Innovation and Inclusion: Freddie Mac’s recent push to consider alternative credit data is mirrored by Australian fintechs aiming to help renters and gig workers access mortgages. Policymakers here can watch closely to see what works—and what doesn’t—across the Pacific.
Australian borrowers and investors can also draw lessons in diversification, as Freddie Mac’s MBS products remain a major fixed-income asset class worldwide. However, the 2025 focus is on ESG and resilience, not just yield.
Where Next? The Future of Mortgage Finance
The US housing market is often a canary in the coal mine for global trends. As Freddie Mac adapts to technological change, regulatory shifts, and new economic pressures, Australian stakeholders should keep an eye on both the innovations and the hazards that come with a centralised mortgage finance system.
For Australians, the message is clear: while we don’t have a Freddie Mac, we face similar challenges in affordability, access, and stability. By studying the US experience, we can better shape our own path through the complex world of property finance.
