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Federal Register / Vol. 86, No. 162 / Wednesday, August 25, 2021 / Proposed Rules Post-model adjustments. While FHFAs models can address and forecast many of the statutory factors that can make affordability for single-family homeownership more challenging for low-income and very low-income households, including increasing interest rates and rising property values, some factors are not captured in the models. FHFA, therefore, considers additional factors when selecting the benchmark level within the modelgenerated confidence interval for each of the single-family housing goals. Some of these additional factors may affect a subset of the market rather than the market as a whole. These factors include the effectiveness of COVID19
vaccination efforts and the path of the virus, as well as other factors that might contribute to an uneven economic
recovery, demographic trends, and the Enterprises share of the mortgage market. Variability in these factors can also have a substantial impact on the ability of the Enterprises to meet the housing goals. Consequently, as discussed further below, FHFA will carefully monitor these factors and consider the potential impact of market shifts or larger trends on the ability of the Enterprises to achieve the housing goals.
Demographic trends. The impact that specific demographic changes, like the housing demand patterns of millennials or the growth of minority households, will have on the housing market is not included explicitly in the market forecast models. Millennials have made up the largest share of home purchase mortgage applications for the past five
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years.33 This generations share of mortgage purchase applications rose about 2 to 4 percentage points a year from 33 percent in 2014 to 47 percent 2019, but jumped dramatically in 2020
to 54 percent.34
Enterprises share of the mortgage market. The Enterprises overall share of the mortgage market is subject to fluctuation. During the mortgage market bubble, the Enterprises share of the market dropped to about 43 percent in 2005. That share rose to about 65
percent in 2012, but declined to about 55 percent in 2015. This share remained relatively stable until 2019, then jumped to 66 percent in 2020, as the Enterprises continued to acquire mortgages even as other private market participants stepped back.

Graph 1: Shares of the Conforming Mortgage Market
100%
80%
60%
40%
20%
0%
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Fannie Mae and Freddie Mac Ill Other e.g., Retained Bank Portfolios
::-: Government FHA/VA/RHS

As shown in Graph 1, over the same time period, the total government share of the mortgage market including the Federal Housing Administration, Department of Veterans Affairs, and Rural Housing Service has generally been expanding, albeit with a recent contraction. In 2015, the total
government share accounted for about 30 percent of overall mortgage originations, considerably up from about 5 percent a decade earlier. That share was relatively stable until 2019, then declined to 22 percent in 2020.

Past Performance of the Enterprises
33 See Pradhan, Archana April 2021. Millennials Lead the Pack for Home Purchases, CoreLogic Blog accessed on 5/25/2021 at https

www.corelogic.com/blog/2021/4/millennials-leadthe-pack-for-home-purchases.aspx.
34 Id. while half of the increase is consistent with the natural growth rate seen since 2014, the
additional half of the 2020 jump was likely driven by the pandemic. In other words, the increase was accelerated by record low mortgage interest rate sic and flexibility to work remotely..

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Table 1 provides the annual performance of both Enterprises on the single-family housing goals between 2010 and 2020. Throughout this proposed rule, Enterprise performance data for 2020 is preliminary. FHFA will
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Source: National Mortgage Database; 2020 data through Q3.