Single-family Volume Rebounds in Second Quarter for Fannie, Freddie
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae and Freddie Mac reported their second quarter financials last week, with both enterprises performing well despite the continued struggle to add single-family mortgages to their portfolios.
For overall net income, Freddie Mac had the better quarter when compared to the same period a year ago. Freddie’s second-quarter profits jumped 20 percent year-over-year to $2.9 billion. Fannie Mae reported a more modest 6.4 percent increase in year-over-year quarterly income, from $4.7 billion in 2022 to $5 billion this year.
Freddie Mac experienced a 40 percent drop in year-over-year new business activity in the single-family segment, with $83 billion for the quarter. However, there was growth over the previous quarter’s $59 billion after four consecutive quarters of falling activity.
Freddie financed 258,000 mortgages, with 55 percent of eligible loans being affordable to low- to moderate-income families, First-time homebuyers represented 52 percent of new single-family home purchase loans. About $73 billion of its acquisition volume was home purchase, with the remaining $10 billion in refinance.
Fannie Mae also boosted its single-family activity from quarter to quarter. Its acquisition volume was $89.2 billion in the second quarter of 2023, an increase of 32 percent compared with $67.5 billion in the first quarter of 2023. Purchase acquisition volume, of which more than 45 percent was for first-time homebuyers, increased to $76.4 billion in the second quarter of 2023 from $56.5 billion in the first quarter of 2023. Refinance acquisition volume was $12.8 billion in the second quarter of 2023, an increase from $11.0 billion in the first quarter of 2023.
Net income increased for the single-family units at both enterprises. Fannie grew its net income in the segment 13 percent year-over-year to $4.4 billion. Freddie Mac increased its year-over-year earnings in the segment just under 10 percent to $2.4 billion.
Fannie Mae reported new multifamily business volume of $15.1 billion in the second quarter, compared with $10.2 billion in the first quarter. The Federal Housing Finance Agency (FHFA) has capped the company’s multifamily loan purchases for 2023 at $75 billion. FHFA requires that a minimum of 50 percent of the company’s multifamily loan purchases must be mission-driven, focused on specified affordable and underserved market segments. Multifamily net income declined 22 percent year-over-year in the second quarter to $600 million.
Freddie Mac’s new multifamily business activity was $13 billion in the quarter, down 13 percent year-over-year. Net income in the segment, on the other hand, nearly doubled to $563 million.
Freddie financed 114,000 rental units, with 90 percent of eligible units being affordable to low- to moderate-income families.
Freddie Mac said higher mortgage rates have reduced demand for both single-family and multifamily financing.
“The second quarter saw single-family home prices stabilize, influenced by strong demand, higher residential mortgage rates, and limited homes for sale,” said Freddie Mac CEO Michael J. DeVito. “Renters continue to be cost burdened as rents rose in the face of softening multifamily property prices. Freddie Mac remained focused on its mission and delivered a solid quarter, helping 372,000 buy, refinance, or rent a home, the majority of them affordable to low- or moderate-income borrowers and renters.”
Added Fannie Mae CEO Priscilla Almodovar: “With our solid second quarter performance, Fannie Mae continues to serve as a stabilizing force for America’s housing finance system in even the most challenging markets. After nearly 15 years of transformation, today, Fannie Mae is safer and stronger.”
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
