Analysts Have Lowered Fannie and Freddie Targets
Keefe Bruyette slashed price targets for Fannie Mae and Freddie Mac as privatization prospects dim for investors.
Updated on Sept. 28, 2026 in Residential
Live Poll
Do you plan to hold or increase your investment in government-backed mortgage shares despite recent volatility?
Keefe Bruyette lowered its price target for Fannie Mae to $3.50 from $6.25 and reduced Freddie Mac to $3.50 from $6.50. The firm maintains an Underperform rating on both mortgage entities amid concerns that their return to private ownership is increasingly unlikely.
Why it matters
The downgrade reflects growing market skepticism regarding the privatization of these government-sponsored enterprises. Investors are concerned about potential dilution of common shares if senior preferred stock held by the Treasury Department is converted.
Fannie Mae shares declined by over 23% in September 2026, while Freddie Mac shares dropped by more than 25%. Year-to-date, Fannie Mae stock has fallen more than 57% and Freddie Mac has seen a decline of nearly 60%.
The players
Keefe Bruyette
This is a specialized investment bank and broker-dealer that focuses on the financial services sector.
Fannie Mae
This government-sponsored enterprise serves to expand the secondary mortgage market in the United States.
Freddie Mac
This government-sponsored enterprise provides liquidity and stability to the U.S. housing market by purchasing mortgages.
President Donald Trump
He is the current President of the United States who revived efforts to privatize major mortgage entities in 2025.
Treasury Department
This executive agency oversees federal finances and holds senior preferred shares in major mortgage entities.
The details
Keefe Bruyette projects further downside of 25% for Fannie Mae and 16% for Freddie Mac from their last close, despite expectations for robust earnings. The government continues to seek a path to return these entities to private ownership to secure the long-term stability of the U.S. housing finance system.
Timeline
June 2026: President Trump stated an IPO remained on the table.
September 2026: Fannie Mae and Freddie Mac stock prices fell significantly.
September 27, 2026: Price targets for both entities were officially lowered.
Roadmap
The market's current trajectory highlights the difficulty of unwinding federal control over these major mortgage entities. This transition remains a critical test for the future of U.S. housing finance and the broader privatization agenda.
Investors holding common shares in these entities may face significant volatility and potential dilution of value. Prospective homeowners should monitor how these fluctuations affect broader mortgage availability and housing market stability.
The takeaway
The sharp decline in share value underscores the persistent uncertainty surrounding government-backed mortgage firms. Investors should focus on fundamental earnings performance rather than banking on speculative privatization timelines.
Further reading
For more on the housing finance sector, explore the Residential section.
Source note: This article includes information reported by Asianet News Network Pvt Ltd.
Live Poll
Do you plan to hold or increase your investment in government-backed mortgage shares despite recent volatility?
