Fannie Mae published updated financials on Wednesday showing higher revenues on declining production volumes during the third quarter.

Market conditions for mortgage lenders and borrowers have deteriorated since the Iran war started in late February, but the government-sponsored mortgage giant managed to post third-quarter net revenues of $7.65 billion, about 1.1% higher than the previous quarter and 4.7% above year-ago levels.

Fannie grew its net income 5% from the second quarter to $4.17 billion, up 8% year over year.

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However, single-family acquisitions by Fannie declined more than 20% over the quarter to $88 billion, reflecting a 2% decline from a year ago. Purchase acquisitions fell more than 4% to $70 billion, while refinance acquisitions plunged 52% to $18 billion from a recent peak of $44 billion in the first quarter.

“Our talented team, strong business model, and solid balance sheet enable us to deliver on our mission while generating solid earnings,” commented Peter Akwaboah, chief operating officer and acting CEO of Fannie Mae, in a press release accompanying the earnings data.

Added Federal Housing Finance Agency Director Bill Pulte, who also serves as board chair of the company: “Fannie Mae landed another strong performance this quarter, growing our net worth 13% year over year to $120 billion.”

Higher rates drive pullback in demand

The third quarter, which ran from July until the end of September, saw mortgage rates for typical 30-year home loans rise precipitously. Freddie Mac data shows average 30-year rates began the quarter at approximately 6.5% and ended the reporting period at almost 7.3%.

Through the end of the summer, lenders and originators watched conventional mortgage demand fall sharply as prospective homebuyers pulled back from the market and refinance demand vanished. Purchases comprised about 80% of single-family originations in September, according to pricing engine and analytics provider Optimal Blue.

Expectations that this imbalance between purchases and refinances may persist through the end of next year has experts cautioning that low production, strained profitability and consolidation will shape the market next year. Between 2023 and 2025, refinance production share totaled 15%, 21% and 29% annually.

Easing mortgage rates during the back half of last year had helped rebalance purchase and refinance demand heading into 2026. Fannie’s refinance acquisition share had increased from 20% in the third quarter of 2025 to 38% in the fourth quarter, 44% in the first quarter and 35% in the second quarter.

But refinance acquisitions retreated to just 21% of single-family loans that Fannie purchased during the third quarter as resurgent inflation, a Federal Reserve interest rate hike and climbing U.S. Treasury yields caused borrowing costs to surge.

By total loan count, single-family acquisitions fell by more than 18% to 260,000 from 318,000 in the second quarter. Purchase acquisitions fell by about 3.5%, while the number of refinance loans purchased by Fannie last quarter fell by 43% to just 66,000.