InfoBytes Blog
FHFA issues 2023 annual report and noted challenges in housing market
On June 14, the FHFA released its annual report to Congress, as required under the Housing and Economic Recovery Act of 2008, detailing FHFA’s activities and the state of the housing finance industry in 2023. The report highlighted the current housing market’s tight supply of homes, high construction costs, and rising interest rates. All three factors contributed to difficulties buying or refinancing homes, as well as significantly increasing the cost of rent and home prices.
The report also discussed the conservatorships of Fannie Mae and Freddie Mac. Despite remaining undercapitalized, the government-sponsored enterprises built out their capital reserves during 2023 and transferred more credit risks onto private investors. The report detailed the FHFA’s effort to promote equitable access to affordable housing through initiatives focused on energy efficiency products and fair lending practices.
The annual report covered FHFA’s research and regulatory activities, including publications of several working papers on climate risk, mortgage debt, and housing supply. An overview of the FHFA’s regulatory activity included several proposed and final rules, including amendments to the Enterprise Regulatory Capital Framework and the Enterprise Duty to Serve Underserved Markets regulation.
The 2023 annual report followed the FHFA’s report on the FHLBank System, as previously covered by InfoBytes. The FHLBank report recommended actions for banks to provide more consistent and sustained access to home financing. The report highlighted the role of the 11 FHLBanks in providing liquidity to their members and supporting housing and community development. The banks faced increased demand for loans in early 2023 due to volatility in the banking sector but maintained good capital liquidity and lending capacities.