Which statement best describes Freddie Mac's purpose when created in 1970?

Which statement best describes Freddie Mac's purpose when created in 1970?

• A. Expanding opportunities for home ownership
• B. Regulating banks
• C. Providing consumer loans for cars
• D. Lowering mortgage rates

Answer: (D)

Freddie Mac’s purpose centers on increasing liquidity in the mortgage market by buying mortgages from lenders. By injecting these loans back into the market, it broadens the funds available for new home loans, which helps foster competition among lenders and can lower borrowing costs. That mechanism—more available mortgage funds leading to lower interest rates—is why the best description is lowering mortgage rates. While expanding home ownership is a natural result of cheaper, more accessible financing, the direct, defining action Freddie Mac was designed to support is a more liquid mortgage market that tends to reduce mortgage rates. It isn’t about regulating banks or providing auto loans, which are outside its scope.

Freddie Mac’s purpose centers on increasing liquidity in the mortgage market by buying mortgages from lenders. By injecting these loans back into the market, it broadens the funds available for new home loans, which helps foster competition among lenders and can lower borrowing costs. That mechanism—more available mortgage funds leading to lower interest rates—is why the best description is lowering mortgage rates. While expanding home ownership is a natural result of cheaper, more accessible financing, the direct, defining action Freddie Mac was designed to support is a more liquid mortgage market that tends to reduce mortgage rates. It isn’t about regulating banks or providing auto loans, which are outside its scope.