Fannie Mae has revised its forecast for the US economy, changing its prediction from a recession to a 1.1% GDP growth in 2024 [dee0a658]. The revision is based on the strength of consumer spending, which has contributed to the avoidance of a recession [dee0a658]. While the yield curve is still inverted, it is getting closer to flipping, indicating a potential shift in the market [dee0a658]. The US economy has also benefited from the Inflation Reduction Act and Defense Department expenditures [dee0a658]. However, there are still geopolitical risks to consider, such as tensions between Russia and Ukraine, conflicts in the Middle East, and the relationship between China and Taiwan [dee0a658].
Fannie Mae also predicts that the spreads between the 10-year Treasury yield and rates on the 30-year fixed mortgage will narrow [dee0a658]. They project a 5.8% rate for the 30-year fixed-rate mortgage in Q4 and a 5.5% rate for the same period next year [dee0a658]. This rate decline will be driven by spread compression [dee0a658].
The Federal Reserve's pivot and the performance of the stock market have also played a role in avoiding a recession [dee0a658].
In the first quarter of 2024, Fannie Mae reported a net income of $4.3 billion, up from $3.9 billion in the previous quarter [4a246a4c]. The GSE's net worth increased from $77.4 billion at the end of 2023 to $82 billion as of March 31 [4a246a4c]. The growth was primarily driven by fair value gains and a benefit for credit losses, partially offset by a decrease in net interest income [4a246a4c]. Fannie Mae provided $72 billion in liquidity to the U.S. housing market during the quarter, helping 280,000 households buy, refinance, or rent a home [4a246a4c]. Despite higher mortgage rates and a drop in loan acquisition volume, Fannie Mae remains profitable [4a246a4c]. They acquired $62.3 billion in single-family conventional loans in Q1 2024, down 11% from the previous quarter [4a246a4c]. The credit characteristics of their single-family portfolio included an average FICO score of 753 at origination and a serious delinquency rate of 0.51% as of March 31 [4a246a4c].
The article, written by HousingWire and published on April 30, 2024, provides insights into Fannie Mae's profits in Q1 2024 and their contribution to the US housing market [4a246a4c].