McLEAN, VA—After re-introducing its 10-year floating rate loan program last fall, Freddie Mac has purchased enough of the paper to do a 10-year floating rate deal. The GSE priced the $1.1 billion in K Certificates and expects to settle them on or about April 24, 2015.
The appetite for the paper was good, Freddie Mac VP Robert Koontz tells GlobeSt.com, although not as deep as it is for the popular 7-year floating rate paper even though the investor base is fairly similar. Koonz says it is not certain yet how often Freddie Mac will offer these securities, "but my best guess is one or two times a year."
Freddie Mac used to offer this product but not in recent years. Demand began to re-emerge last year as the market shifted. It can appeal to a certain type of borrower and lender, says Mitchell Resnick, vice president of Freddie Mac Multifamily Capital Markets.
"Some borrowers like floaters because they believe rates will stay low for a while," he tells GlobeSt.com. "Others may want the more flexible prepayment terms associated with floating."
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