A new independent study by the Urban Institute finds that advances from the Council of Federal Home Loan Banks (FHLBanks) have contributed to substantial growth in housing and community lending over the past two decades.
The research, titled “The Value of the FHLBank System to Promote Housing and Community Development Lending,” covering data from 2002–2024, shows that increased liquidity provided through FHLBank advances is strongly associated with larger volumes of mortgage, real estate, and community development loans by member banks and credit unions.
The study — the second installment in a three-part research series commissioned by the Council — highlights that increases in FHLBank advances helped drive more than $1.8 trillion in total lending by financial institution members during the period studied. Of that total, roughly $850 billion is linked to additional residential real estate lending, reinforcing the role of FHLBank liquidity as a foundational component of housing finance.
Researchers found that smaller commercial and savings banks, in particular, showed the greatest lending response to advances, underscoring the importance of FHLBank support for community-based lenders. The analysis also indicates that advances correlate with expanded lending to small businesses, farms, and low- and moderate-income households, bolstering both economic activity and community development.
“We believe in the strength of local,” said Ryan Donovan, president and CEO of the Council of Federal Home Loan Banks, the public voice of the FHLBank System. “The FHLBanks exist to provide reliable liquidity to roughly 6,500 financial institutions that anchor local communities and provide an economic lifeline to families and businesses. Urban Institute’s analysis makes clear just how crucial a role FHLBank advances play in driving consumer, mortgage and small business lending, particularly for the nation’s small community lenders. The clear takeaway from this study is that the FHLBanks turn liquidity into action — helping local lenders finance homes, support small businesses, and strengthen the communities they serve.”
A key technical finding shows that a $100 increase in advances relative to assets is associated with a measurable uptick in mortgage originations, reinforcing the link between FHLBank funding and homeownership finance. Additionally, the relationship between advances and lending strengthened after the 2008 financial crisis, as alternative funding sources became more constrained and members increasingly leaned on FHLBank support.
Urban Institute’s analysis draws on quarterly Call Report data, Home Mortgage Disclosure Act (HMDA) records, and Community Reinvestment Act (CRA) data, using multiple econometric approaches to examine the relationship between advances and lending outcomes.
