Executives warned on the earnings webcast that refinance volume will keep falling and that more delinquencies are coming
Fannie Mae earned $4.2 billion in the third quarter of 2026, its best result in five quarters, even as the mortgage giant more than doubled the money it set aside for loans that may go bad.
Net income rose 5% from the second quarter and 8% from a year earlier, according to results the government-sponsored enterprise released Oct. 28.
Net worth reached $119.6 billion, up 13% year over year. Net revenues rose just 1% to $7.7 billion. Most of that revenue comes from guaranty fees on Fannie Mae’s $4.1 trillion book of business.
Much of the rest of the gain came from a swing to $630 million in fair value gains, after a $76 million loss in the prior quarter.
Rates drove most of the results. Acting CEO Peter Akwaboah said on the company’s earnings webcast that “elevated interest rates have broad impacts across our business. They also continue to put pressure on housing affordability, making Fannie Mae’s mission particularly important.”
How much did Fannie Mae’s credit costs rise?
The provision for credit losses climbed to $1.14 billion from $485 million in the second quarter. Single-family provisions roughly tripled to $694 million.
The company blamed higher actual and projected interest rates, newly acquired loans and new delinquencies.
The single-family serious delinquency rate rose to 0.62% from 0.58%, the highest level in the five quarters Fannie Mae charted.
Chief Financial Officer Chryssa C. Halley pointed to strained household finances.
“We believe recent increases in both metrics are due in part to adverse macroeconomic conditions, including higher interest rates and persistent inflation challenges, which constrain household budgets, particularly for lower income borrowers,” she said.
She added that delinquencies remain low by historical standards.
Multifamily profit fell 32% to $535 million. “Looking ahead, we expect ongoing multifamily market challenges to result in additional delinquencies,” Halley said.
Relief looks distant. Fannie Mae’s economists now expect the 30-year fixed rate to average 7.5% through all of 2027.
Sam Williamson of First American says mixed economic data, including hotter-than-expected inflation and softer job growth, may give the Federal Reserve reason to pause before considering another rate hike. https://t.co/fk21fGshGm
— Mortgage Professional America Magazine (@MPAMagazineUS) October 27, 2026
What does the refinance slowdown mean for brokers?
Single-family acquisitions fell to $88.3 billion from $111.2 billion. Refinance volume dropped by more than half, to $18.2 billion from $38.4 billion, while purchase lending held at $70.1 billion. Nearly 103,000 first-time buyers made up 53% of single-family purchase acquisitions.
“Single-family acquisitions were lower quarter-over-quarter, primarily due to lower refinance volumes from higher mortgage rates, a trend we expect to continue if mortgage rates remain elevated,” Halley said.
Credit scoring may give purchase-focused brokers an edge. Fannie Mae listed its VantageScore 4.0 expansion among the quarter’s highlights. Desmond P. Smith, EVP and chief growth officer at United Wholesale Mortgage, told Mortgage Professional America in an interview on how VantageScore is helping brokers close more loans that the gap between scores already shows up in pricing.
“We’ve seen, it may even be thousands by this point, of people whose FICO score was, say, 642, and the VantageScore comes back at 708,” Smith said.
“That’s a different LLPA, saving people thousands of dollars.”
UWM CEO Mat Ishbia, speaking at the AIME Fuse event, urged originators not to wait for relief.
“Everyone said rates are going to go down. I thought they were going to go down too, and what did they do? They went up,” he said.
“I don’t control it. But I do control that I’ve decided that the time is now to go win.”
The average guaranty fee on new single-family acquisitions edged up to 53.8 basis points from 53.5 basis points.
Fannie Mae is still in conservatorship. Its actual available CET1 capital was a $30 billion deficit as of Sept. 30, which keeps questions about its eventual release from government control alive.
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