Freddie Mac 2004 Annual Report Download - page 94

compared to 2004 are primarily the result of house-price appreciation combined with the surge in reÑnance
activity in these years as a result of the reduction in interest rates.
The proportion of mortgage loans purchased resulting from reÑnancing transactions decreased from a
total of 81 and 74 percent for the years ended December 31, 2003 and 2002, respectively, to 60 percent for the
year ended December 31, 2004. This decrease in reÑnance activity is a result of the higher interest rates
experienced during the second half of 2003 and 2004.
The quality of mortgage loans purchased continued to be strong. The strong credit quality of borrowers is
evidenced by the high average credit scores of mortgage loans purchased of 719, 729 and 722 for the years ended
December 31, 2004, 2003 and 2002, respectively. Credit scores are ranked on a scale of approximately 300 to
850 points. The slight decrease in the average credit score in 2004 resulted from a decline in the proportion of
refinance mortgage loans, which generally have higher credit scores than purchase mortgage loans. The
proportion of one-unit properties in our mortgage loan purchase volume remained stable over the past three
years, accounting for 97 percent for the year ended December 31, 2004, a slight decrease from 98 percent for the
years ended December 31, 2003 and 2002. The proportion of primary and secondary residences in our mortgage
loan purchase volume remained stable over the past three years, accounting for 96 percent, 98 percent and
97 percent in 2004, 2003 and 2002, respectively.
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