Pimco, a major investment management firm, issued a public warning regarding the potential initial public offering (IPO) of Fannie Mae and Freddie Mac. Libby Cantrill, Pimco's head of public policy, stated that an IPO could drive up mortgage rates for Americans.
Cantrill estimated that this increase could equate to roughly $600 a year in extra interest payments for the average borrower. This would add a significant financial burden on families already facing high housing costs.
This warning from a prominent financial institution highlights a significant potential negative consequence of Fannie Mae's privatization. Increased mortgage rates could dampen housing demand, impact affordability, and potentially reduce Fannie Mae's market share if its cost of capital rises post-IPO.
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