What's Happening?
The Federal Housing Finance Agency (FHFA) has announced new housing goals for Fannie Mae and Freddie Mac for the years 2026 through 2028. These goals, according to experts, may reduce protections for low-income Americans. The new rule lowers the benchmarks for single-family low-income mortgages, while maintaining the targets for multifamily mortgages. Specifically, the benchmark for single-family purchase and refinance goals for borrowers with incomes up to 80% of the area median income has been reduced from 25% to 21%. For those with incomes up to 50% of the area median income, the benchmark has been lowered from 6% to 3.5%. The FHFA has also simplified its regulatory framework by consolidating area-based subgoals into a single low-income areas
subgoal and removing temporary measurement buffers.
Why It's Important?
The changes in housing goals are significant as Fannie Mae and Freddie Mac play a crucial role in the U.S. housing market, backing a majority of the country's residential mortgages. The new benchmarks could potentially limit access to affordable financing for low- and moderate-income borrowers, exacerbating existing inequalities in housing access. While some industry leaders, like the Mortgage Bankers Association, support the changes as reflective of current market conditions, others express concern over the potential negative impact on housing affordability. The adjustments are seen as a shift towards supporting middle-class households, but they may also challenge efforts to improve housing affordability for lower-income families.
What's Next?
The new housing goals are set to take effect on February 23, 2026. As these changes are implemented, stakeholders will closely monitor their impact on housing affordability and access. The FHFA's decision may prompt reactions from housing advocates and policymakers who are concerned about the potential reduction in credit access for low-income borrowers. The effectiveness of these new goals in balancing the needs of different income groups will be a key area of focus in the coming years.
