Fannie Mae’s purchase mortgage business accelerated in the second quarter, offering a measure of momentum in a housing market still constrained by elevated rates and affordability pressures.
The government-sponsored enterprise acquired $72.8 billion in single-family purchase loans during the quarter, up 32.6% from $54.9 billion in the first quarter and 13.2% from $64.3 billion one year earlier, according to financial results released Wednesday.
Purchase loans drove Fannie’s total single-family acquisition volume to $111.2 billion, a 12.7% quarterly increase and the highest level since the third quarter of 2022.
Refinance acquisitions moved in the opposite direction from the first quarter, falling 12.3% to $38.4 billion from $43.8 billion. However, refinance volume remained well above the $19.8 billion recorded one year earlier.
The mix underscores the uneven market mortgage originators are navigating: purchase production improved sharply over the full quarter, but refinancing remained highly sensitive to rate movements.
More recent data suggest that momentum may already be under pressure. Fannie Mae’s Purchase Application-Level Index showed purchase application dollar volume down 2.5% week over week and 14.8% year over year for the week ending July 24. Refinance application volume fell 6.2% for the week but remained 6% above last year.
First-Time Buyers Drive Purchase Business
Fannie Mae provided $125 billion in mortgage-market liquidity during the second quarter, supporting approximately 201,000 home purchases, 117,000 refinances, and 99,000 rental units.
Nearly 110,000 of the purchase borrowers were first-time buyers, who accounted for 55% of Fannie’s single-family purchase acquisitions.
For LOs, that concentration points to where a substantial share of the available purchase business is being generated. First-time buyers frequently require more help navigating down payment options, mortgage insurance, seller concessions, closing costs, and qualification challenges than repeat purchasers with existing home equity.
“Our financial performance advances our mission to promote a stable, accessible, and affordable housing market across America,” said Peter Akwaboah, Fannie Mae’s acting CEO and chief operating officer.
Fannie Mae said the credit profile of its single-family book remained largely unchanged. Its single-family serious delinquency rate held at 0.58% at the end of June, while the weighted-average credit score at origination across the guaranty book was 753.
The company’s provision for single-family credit losses increased to $226 million from $103 million in the first quarter. Fannie attributed the provision primarily to new acquisitions, newly delinquent loans, and the redesignation of certain loans as held for sale, partially offset by the benefit of home-price growth.
Appraisal Alternatives Reach $3 Billion In Estimated Savings
Fannie also used its earnings report to highlight the growing role of appraisal alternatives in lowering upfront mortgage costs and shortening the origination process.
The company estimates that its appraisal alternatives have generated $3 billion in borrower savings since 2018 across 5.34 million loans sold to Fannie. That estimate is based on an approximate weighted-average appraisal cost saving of $550 per loan.
The alternatives include value acceptance, formerly referred to as an appraisal waiver, and value acceptance plus property data. Both are offered to eligible lenders and loans through Desktop Underwriter.
With value acceptance, Fannie uses property data, its valuation models, and the value submitted by the lender to determine whether a traditional appraisal is necessary. When an eligible lender exercises the offer, Fannie provides relief from certain representations and warranties concerning the property’s value, marketability, characteristics, and eligibility.
Value acceptance plus property data requires an interior and exterior property data collection by a trained third party but does not require a traditional appraisal. Fannie said the option allows it to extend appraisal-related efficiencies to loans for which additional information about the property is needed.
For lenders, the potential benefit reaches beyond the borrower’s appraisal fee. Eliminating or modifying the traditional appraisal process can reduce cycle times, provide greater closing certainty, and limit some collateral-related repurchase risk. The options are not available on every loan, however, and eligibility is determined through Desktop Underwriter.
“Lenders are using our enhanced Desktop Underwriter services to drive speed, certainty, and a more seamless borrower experience,” said Jake Williamson, Fannie Mae’s executive vice president and head of single-family. “We are using technology with the goal of modernizing the lending process and lowering up-front mortgage costs.”
Fannie Earns $4 Billion
Fannie Mae reported $4 billion in second-quarter net income, up 7% from the first quarter and 20% from one year earlier. Net revenue increased 4% quarterly and annually to $7.6 billion.
The company’s net worth rose to $116.5 billion, marking its 34th consecutive profitable quarter. Its single-family business generated $3.3 billion in net income, up 3% from the first quarter and 20% year over year.
The average guaranty fee charged on newly acquired conventional loans, excluding Temporary Payroll Tax Cut Continuation Act fees, declined to 53.5 basis points from 55.1 basis points in the first quarter and 57.3 basis points one year earlier.
For mortgage professionals, the results show a purchase market that generated meaningful second-quarter growth without a broad refinance recovery. They also show Fannie placing greater emphasis on the operational side of affordability: reducing upfront expenses and closing friction on eligible loans, even when rates and home prices remain beyond a lender’s control.
*This article was primarily written by a human author. AI tools were used in a limited capacity for research assistance or light editing.
