Fitch Ratings downgraded the credit scores of Fannie Mae and Freddie Mac to AA+ from AAA, a day after it cut the U.S. sovereign credit rating.
But the senior housing portfolio is starting to show signs of significant stress, causing the multifamily sector's delinquency rate to rise by 200% year-over-year.
The downgrades of the two government-sponsored enterprises are consistent with its downgrade of U.S. government debt, Fitch said in a press release on Wednesday. The move was "not being driven by fundamental credit, capital or liquidity deterioration at the firms," it said.
But the government-sponsored enterprise is still concerned about the fiscal health of its lender counterparties as volumes are down considerably from last year.
Fannie Mae and Freddie Mac benefit from implicit government support, Fitch said. The two enterprises help to backstop the multi-trillion dollar market for U.S. home mortgages.
Fannie Mae and Freddie Mac didn't immediately respond to a request for comment.
