Fannie Mae reports $119.6 billion in net worth as Freddie Mac raises credit provision
Key Facts
Fannie Mae and Freddie Mac reported third-quarter 2026 results, posting strong earnings alongside higher credit loss provisions. Fannie Mae’s net worth reached $119.6 billion on September 30, up 3% from the previous quarter and 13% year over year. At Freddie Mac, the credit loss provision was $800 million, compared with $175 million in the same period last year. The chief financial officer attributed the increase to building reserves for single-family loans amid higher mortgage rate expectations and purchases of new loans. He said this came "despite stable current portfolio performance."
Fannie Mae said improved net income reflected a shift from fair-value losses to gains, partly offset by a higher credit loss provision. The total provision was $1.1 billion in the quarter, according to the company’s statement. The single-family loan provision reflected higher effective and expected interest rates, as well as an increase in new and recently delinquent loans. For multifamily properties, the provision reflected weaker credit indicators, lower near-term property value expectations and higher interest rates. This puts earnings growth up against the rising cost of hedging credit risk.
Fannie Mae linked the change in risk to interest rate movements during the quarter, saying rates rose, with the largest increases at the end of the period. Higher rates tend to reduce loan purchase volumes, but they also slow prepayments and the decline in book balances. The company said this slowdown helps sustain guarantee fee income because loans remain on the books longer. At the same time, the longer life of loans may leave credit loss exposure in place for a longer period. Higher rates also weigh on multifamily property prices and values, as well as new business in that sector.
Part of Fannie Mae’s income depends on a mortgage guarantee book that reached $4.1 trillion in the third quarter and generated more than $6 billion in guarantee fee income. More than 70% of that income came from loans and mortgage-backed securities dating from 2022 or earlier. The company said income from its portfolio rose 4% from the previous quarter. It attributed the increase mainly to higher average balances and yields in its institutional liquidity portfolio. These figures show that the existing book and portfolio continued to contribute to the company’s revenue during the quarter.
At Freddie Mac, new multifamily business activity fell to $16 billion in the third quarter, from $25 billion a year earlier. The company attributed the decline mainly to higher mortgage rates. The drop points to a contraction in the sector alongside the interest rate pressures that Fannie Mae said are affecting property prices and values and new business. Meanwhile, Freddie Mac attributed the increase in its credit provision to higher mortgage rate expectations and purchases of new loans. Current portfolio performance remained stable, according to the chief financial officer’s statement.
On housing market support, Fannie Mae said it had provided $344 billion in liquidity from the start of 2026 through the results announcement. It added that it had helped about 1.2 million families, including more than 295,000 first-time homebuyers. Freddie Mac provided its home price outlook, projecting growth of 1.3% over the next twelve months, followed by 1.5% over the subsequent twelve months. These projections set out a gradual path for price increases over the two periods identified by the company. Fannie Mae’s growing net worth and Freddie Mac’s larger credit provision remain among the quarter’s key indicators of the companies’ financial condition and market risks.