Pimco Warns Fannie-Freddie IPO to Drive Up Mortgage Rates Americans Pay
Citigroup says another risk to mortgage rates comes from the fact the two companies will face strong incentives to increase profitability to make an IPO appealing to potential investors.
Photographer: Al Drago/BloombergPacific Investment Management Co. is warning that the Trump administration’s plan to sell shares in Fannie Mae and Freddie Mac could drive up the mortgage rates that Americans pay.
“Don’t fix what is not broken,” Libby Cantrill, Pimco’s head of public policy, wrote in a note to clients earlier this week. She said that unless the sale can be orchestrated in a way that preserves the government’s commitment to financially support the institutions, investor demand may cool for the mortgage-backed securities that they sell. And this, Cantrill said, would in turn make home loans more expensive for millions of people.