Fannie Mae and Freddie Mac maintained double-digit growth in profits in 1996 and early 1997 on the strength of recent rapid increases in their holdings of mortgages and their own mortgage securities, consistent with the pattern of recent years. Net interest income now accounts for more than two-thirds of the Enterprises’ combined gross revenues. New mortgage purchase and guarantee volumes for the Enterprises rose last year to their highest levels since 1993, as the nation’s strong economy and low interest rates stimulated record house sales and increased refinancing of existing loans. While the Enterprises’ market share of new loans also rose, largely because of decreased borrower interest in adjustable-rate loans, it remained below the level of the early 1990s.
This report details developments in the secondary mortgage market, developments with the Enterprises, and OFHEO's regulatory activities in 1996 and early 1997.