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Federal Register / Vol. 86, No. 246 / Tuesday, December 28, 2021 / Rules and Regulations C. Other Proposed Changes The final rule makes minor technical changes to some regulatory definitions and counting rules. These changes are non-substantive changes intended to conform the regulation to existing FHFA
practices in measuring the performance of the Enterprises under the housing goals.

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IV. Single-Family Housing Goals A. Factors Considered in Setting the Single-Family Housing Goal Benchmark Levels The Safety and Soundness Act requires FHFA to consider the following seven factors in setting the single-family housing goals:
1. National housing needs;
2. Economic, housing, and demographic conditions, including expected market developments;
3. The performance and effort of the Enterprises toward achieving the housing goals in previous years;
4. The ability of the Enterprises to lead the industry in making mortgage credit available;
5. Such other reliable mortgage data as may be available;
6. The size of the purchase money conventional mortgage market, or refinance conventional mortgage market, as applicable, serving each of the types of families described, relative to the size of the overall purchase money mortgage market or the overall refinance mortgage market, respectively;
and 7. The need to maintain the sound financial condition of the Enterprises.10
FHFA considered each of these required statutory factors, as described in detail in the proposed rule, in setting the benchmark levels for the singlefamily housing goals.11
FHFAs analysis and goal setting process includes developing econometric forecast models for each of the single-family housing goal segments that explicitly take some of the statutory factors into account, and then considering the other statutory factors and variables that impact affordable homeownership in selecting the specific benchmark level.12 Many of these factors indicate that low-income and very low-income households are facing, and will continue to face, difficulties in achieving homeownership or in refinancing an existing mortgage. These factors, such as rising home prices and 10 12

U.S.C. 4562e2B.
86 FR 47398 Aug. 25, 2021.
12 See http www.fhfa.gov/
PolicyProgramsResearch/Research/Paper Documents/Dec2021_Market-Estimates-20222024.pdf.
11 See
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stagnant household incomes, also impact the Enterprises ability to meet their mission and facilitate affordable homeownership for low-income and very low-income households.
Nevertheless, FHFA expects and encourages the Enterprises to work toward meeting their housing goals requirements in a safe and sound manner.
Current market outlook. There are many factors that impact the affordable housing market as a whole, and changes to any one of them could significantly impact the ability of the Enterprises to meet the housing goals. FHFA will continue to monitor the affordable housing market and take these factors into account when considering the feasibility of the goals. In developing the market models, FHFA, as in past rulemakings, used Moodys forecasts as the source for macroeconomic variables where available.13 In cases where Moodys forecasts were not available for example, the share of governmentinsured/guaranteed home purchases and the share of government-insured/
guaranteed refinances, FHFA generated and tested its own forecasts as in past rulemakings.14 Elements that impact the models and the determination of benchmark levels are discussed in FHFAs market paper and some of these elements are discussed below.15
Interest rates are very important determinants of mortgage market trajectory. Moodys September 2021
forecast projects that mortgage interest rates will rise gradually from 2.9 percent in 2021 to 3.7 percent by 2024.16
Moodys forecast also projects that the unemployment rate will gradually fall from its April 2020 peak of 14.8 percent to 3.9 percent in 2024.17 Moodys forecast also projects a modest increase in per capita disposable nominal income growthfrom $52,800 in 2020
to $59,300 in 2024. Furthermore, Moodys forecast estimates that the 13 The
macroeconomic outlook described herein is based on Moodys forecasts as of September 2021.
14 This refers to the mortgages insured or guaranteed by government agencies such as the Federal Housing Administration, Department of Veterans Affairs, and Rural Housing Service.
15 See http www.fhfa.gov/
PolicyProgramsResearch/Research/
PaperDocuments/Dec2021_Market-Estimates-20222024.pdf.
16 Refer to Exhibit 1 in the The Size of the Affordable Mortgage Market: 20222024 Enterprise Single-Family Housing Goals, available at http
www.fhfa.gov/PolicyProgramsResearch/Research/
PaperDocuments/Dec2021_Market-Estimates-20222024.pdf.
17 U.S. Bureau of Labor Statistics Labor Force Statistics from the Current Population Survey, available at: https data.bls.gov/timeseries/
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inflation rate will be in the 2.32.8
percent range from 2022 through 2024.
The combination of low interest rates, high deferred demand, and low supply fueled by the COVID19 pandemic drove house prices up by 18.5 percent in the third quarter of 2021 relative to the third quarter of 2020, based on FHFAs purchase-only House Price Index HPI.18 Moodys September 2021
forecast of the same HPI index expects house prices to increase at the annual rates of 4.0, 1.2, and 0.2 percent in 2022, 2023, and 2024, respectively.
Taken together, the expected increase in mortgage interest rates and house prices will likely impact the ability of lowand very low-income households to purchase homes. Housing affordability, as measured by Moodys forecast of the National Association of Realtors NAR Housing Affordability Index HAI, is projected to decline from an index value of 166.8 in 2020 to 151.6
in 2024. Lower values of the HAI imply that housing has become less affordable.19 Further, the supply of affordable housing has not kept pace with the growth of the demographic demand for affordable housing, even before the COVID19 pandemic.
In many ways, 2020 was an unusual year in its record volumes of both home purchase and home refinance loans.
Low interest rates coupled with rising house prices created an incentive for many homeowners to refinance, resulting in a surge in refinance activity in 2020. The refinance share of overall mortgage originations increased from 28
percent in 2018 to 61 percent in 2020.
Moodys forecasts this share to decline slightly to 59 percent in 2021, subsequently increase to 64 percent in 2022, and then decline to 51 percent and 38 percent in 2023 and 2024, respectively.
18 See https www.fhfa.gov/Media/PublicAffairs/
Pages/US-House-Prices-Rise-18pt5-Percent-overthe-Last-Year-Up-4pt2-Percent-from-2Q.aspx.
19 NARs HAI is a national index. It measures, nationally, whether an average family could qualify for a mortgage on a typical home. A typical home is defined as the national median-priced, existing single-family home as reported by NAR. An average family is defined as one earning the median family income. The calculation assumes a down payment of 20 percent of the home price and a monthly payment that does not exceed 25 percent of the median family income. An index value of 100
means that a family earning the median family income has exactly enough income to qualify for a mortgage on a median-priced home. An index value above 100 signifies that a family earning the median family income has more than enough income to qualify for a mortgage on a median-priced home. A
decrease in the index value over time indicates that housing is becoming less affordable.

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