WASHINGTON — Mortgage giant Freddie Mac reported net income of $2.3 billion for the third quarter, reversing a loss in the same period of 2015.
The government-controlled company said Tuesday its fees from lenders for backing mortgages increased and the impact of interest rates moderated in the July-September period.
McLean, Virginia-based Freddie will pay an equivalent dividend of $2.3 billion to the U.S. Treasury next month. Freddie will have paid $101.4 billion in dividends, exceeding its government bailout of $71 billion.
The government rescued Freddie and larger sibling Fannie Mae at the height of the financial crisis in September 2008, after they suffered huge losses from risky mortgages in the housing market bust.
Together the companies received taxpayer aid totaling about $187 billion. The housing market’s gradual recovery has made Freddie and Fannie profitable again.
Freddie’s third-quarter profit marked a reversal from the $475 million net loss it sustained in the same period last year.
The company said it had fewer delinquent mortgages on its books in the third quarter. “Credit quality is at its best in eight years,” Freddie CEO Donald Layton said in a statement.
Record-low interest rates this year have helped spur home purchases and boost the housing market.
The Federal Reserve has been holding its key short-term rate at a record low near zero for seven years, since the onset of the financial crisis. Expectations have been building for a slight rate increase by the Fed next month, which would be its second in a year. The Fed isn’t expected to move on rates at its meeting this week, coming so close to Election Day, but it could signal a December hike.
The housing market’s revival over the last four years has been choppy, and it has lagged behind the rest of the economy. Despite the low borrowing rates that could lure prospective homebuyers, the market has remained hampered by tight mortgage credit, rising home prices and stagnating incomes. Affordability remains a problem.