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Freddie Mac (SWOT Analysis)

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“SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the environmental Opportunities and Threats facing that firm. SWOT analysis is a widely used technique through which managers create a quick overview of a company’s strategic situation. The technique is based on the assumption that an effective strategy derives from a sound “fit” between a firm’s internal resources (strengths and weaknesses) and its external situation (opportunities and threats). A good fit maximizes a firm’s strengths and opportunities and minimizes its weaknesses and threats. Accurately applied, this simple assumption has powerful implications for the design of a successful strategy.”

Freddie Mac 

Freddie Mac (Federal Home Loan Mortgage Corporation) is a public company engaged in the residential mortgage market in the US. The company engages in the purchase of residential mortgage loans and mortgage-related securities from mortgage lenders and securities dealers. Additionally it provides credit guarantee of payment of principal and interest for residential mortgages originated by mortgage lenders. The company's government sponsored entity status gives it a strong competitive advantage. However, market uncertainty and volatility coupled with subprime exposure could affect the company’s profitability.

Strengths, Weaknesses, Opportunities and Threats (SWOT)

Location of Factor






  • Markets perception of implicit government support to Freddie Mac’s turns explicit
  • New Housing Law helps Freddie Mac’s business continuity
  • Increasing guarantee fee income


  • Strained net interest margin on account of poor asset quality
  • Unsustainable high capital gearing
  • Dividend policy detrimental to the company’s financial health



  • The shift away from exotic mortgages
  • Automation of underwriting activities
  • Low interest rates


  • Market uncertainty and volatility
  • The loss of business volume from key lenders
  • Increased credit risk related to subprime and Alt-A mortgage loans
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