Headwinds Grow as Fannie Mae Faces a Tougher Mortgage Landscape

The government-backed lender continued to post solid profits in 2025, but the shine is fading as the market environment darkens. Fannie Mae?s annual net income reached $14.4 billion, marking the 14th consecutive profitable year, yet the pace of improvement is cooling. The primary drag comes from credit provisions: after not needing substantial reserves in the prior year, 2025 saw credit risk costs of about $1.6 billion press on the bottom line. Additionally, impairment gains declined by $1.7 billion relative to the year before.

On the operational front, the group remained steady and disciplined. Net revenues totaled $29.0 billion, while cost-cutting efforts trimmed administrative expenses by $141 million. At year-end, the company?s equity stood at a record $109.0 billion.

Warnings from the Mortgage Market

The timing of these figures adds urgency: the Mortgage Bankers Association (MBA) reported a rise in late mortgage payments to 4.26% in Q4. Within the FHA segment, the delinquency rate climbed to 11.52% ? the highest level since Q2 2021.

For conventional loans, the default rate increased to 2.89%. For its own portfolio, Fannie Mae reported a modest uptick in serious delinquencies to 0.63%. Taken together, these dynamics push the lender toward a more cautious stance.

Should investors sell immediately? Or is it worth buying Fannie Mae?

Key metrics at a glance:

• Annual net income 2025: 14.4 B dollars (down from the prior year)
• Equity: 109.0 B dollars (record high)
• Market backdrop: Mortgage delinquencies rising to 4.26%
• Liquidity: 409 B dollars provided to the market

Despite the mounting pressures, Fannie Mae remains a central pillar of the U.S. housing market, financing roughly 1.5 million single-family homes and rental units in 2025. With equity at a record level, the cushion is sizable enough to help absorb higher credit losses, but the era of clean accounting gains without meaningful risk provisioning appears behind us, given the current market signals.

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