Fannie Mae and Freddie Mac Privatization — Stocks Soar, but Homebuyers May Suffer

TradingKey - On Wednesday, May 21, U.S. President Donald Trump reignited the push to end the government conservatorship of Fannie Mae and Freddie Mac, the two largest mortgage lenders in the United States, and move toward full privatization.

In response, shares of both companies surged: Freddie Mac (FMCC) rose 41.98%, and Fannie Mae (FNMA) jumped 50.60% by the next trading day on May 22. Year-to-date in 2025, Fannie Mae and Freddie Mac have gained 226% and 139 , respectively.

A Long Road to Privatization

After the 2008 financial crisis, the U.S. government took over Fannie and Freddie to prevent their collapse from triggering a broader financial meltdown. Their shares were delisted from the NYSE in 2010 and moved to over-the-counter (OTC) trading.

Trump had previously attempted to return the two firms to private ownership during his first term, but those efforts stalled.

Now, with renewed talk of privatization, investor optimism has returned — driven by expectations that the two giants, which back roughly 70% of U.S. mortgages, could regain access to public capital markets.

Market Concerns: Higher Mortgage Rates Ahead?

However, many experts are warning that shifting Fannie and Freddie from government-backed entities to fully private institutions could create pressure on the U.S. housing market.

The withdrawal of direct government support may lead to higher mortgage rates, as investors demand greater compensation for increased risk. Some analysts estimate that privatization could push mortgage rates up by 0.5 percentage points or more, increasing borrowing costs for homebuyers.

This concern comes amid already rising mortgage rates and weakening housing demand.

On May 22, data showed that U.S. existing home sales fell 0.5% month-over-month in April, missing expectations for a 2% increase. Annualized sales totaled 4 million units, marking the worst April performance since 2009.