Fannie Mae and Freddie Mac (the Enterprises) were chartered by Congress to provide stability and liquidity to the nation’s secondary mortgage market, as well as to promote broad access to mortgage credit. They primarily do so by issuing securities backed by mortgage loans they acquire and guaranteeing timely payments to investors in these securities. In 2024, the Enterprises collectively acquired more than $650 billion of single-family mortgages.
The Enterprises charge guarantee fees, both ongoing and upfront, to cover the costs of providing these guarantees. These fees serve as the primary source of revenue for the Enterprises and, in doing so, drive profitability and capital accumulation. Despite this, guarantee fees generally represent a small portion of the total monthly mortgage payment for most borrowers. In 2024, the average guarantee fee across the Enterprises’ single-family loan acquisitions was 65 basis points – or 0.65 percent of the loan amount per year. This compares to average interest rates for 30-year fixed-rate mortgages that were between 6.1 percent and 7.2 percent during the year.
The Housing and Economic Recovery Act of 2008 (HERA) requires FHFA to conduct an ongoing study of the guarantee fees charged by the Enterprises and to annually submit a report to Congress on the results of the study. Pursuant to these requirements, this report presents an analysis of the guarantee fees charged by the Enterprises in 2024, along with a comparison to those fees charged in 2023.
In summary, the Enterprises’ average guarantee fee of 65.2 basis points on 2024 single-family loan acquisitions declined slightly from 65.5 basis points in 2023. This modest change reflected a reduction in upfront fees, partially offset by an increase in ongoing fees. Upfront fees declined due to the Enterprises’ acquisition during 2024 of certain loans with limited guarantee fees designed to support the Enterprises’ housing mission. The rise in ongoing fees was driven by changes in the product mix, the continued effects of a purchase money market, and capital return requirements.