Good day, and welcome to the Fannie Mae Third Quarter 2022 Financial Results Conference Call. At this time, I will now turn it over to your host, Pete Bekell, Fannie Mae's Director of External Communications.
Hello, and thank you all for joining today's conference call to discuss Fannie Mae's Q3 2022 Financial Results. Please note this call includes forward looking statements, including statements about Fannie Mae's expectations related to economic and housing market conditions, their impact on our business and financial results and the factors that will affect them, for the future performance of the company's book of business, the company's business plans and their impact and the company's financial results and the factors that will affect them. Future events may turn out to be very different from these statements. The Risk Factors and Forward Looking Statements sections in the company's 3rd for the Q1 of 2019. Order 2022 Form 10 Q filed today and its 2021 Form 10 ks filed February 15, 2022, to describe factors that may lead to different results.
A recording of this call may be posted on the company's website. We ask that you do not record this call for public broadcast and that you do not publish any full transcript. I'd now like to turn the call over to Fannie Mae President and Interim Chief Executive Officer, David C. Benson Infantimeade's Chief Financial Officer, Krista C. Halley.
Thanks, Pete, and thanks to all
of you for joining us as we review our Q3 financial results. We reported $2,400,000,000 in net income compared to $4,700,000,000 in the previous quarter. These earnings resulted in an increase in our net worth to $58,800,000,000 Now in a moment, Chris will do a deeper dive into our quarterly results and their main drivers, including the macroeconomic conditions impacting housing. In the Q3, inflationary pressures persisted. September data showed the consumer price index grew 8.2% year over year.
The Federal Reserve continued to increase short term interest rates in its attempt to obtain inflation and reiterated a commitment to reducing its balance sheet. The 10 year treasury rate increased 82 basis for questions over the course of the quarter from 3.01 percent to 3.83 percent. And while 3rd quarter GDP increased by 2.6% on an annualized basis, we believe this boost is likely temporary and that full year 2022 GDP will be essentially flat. All of these factors are having a direct impact on the housing finance system and on our business. The 30 year fixed rate mortgage rate Increased 100 basis points during the quarter from 5.7 percent to 6.7% and at October month end was at 7.08%.
Following a period of rapid home price growth in 2020, 2021 and the first half of twenty twenty two, home prices declined to 0.2% on a national basis in the 3rd quarter. We estimate that home prices nationally rose 13.8% year over year in the 3rd quarter, a deceleration from the revised 19.1% year over year growth we saw in the 2nd quarter. For borrowers, these price increases and rising interest rates mean that homes are significantly less affordable than they were a year ago. By our measure, affordability is worse than it was during the 2000 and five-two 1,007 period. As houses become less affordable, demand for housing slows.
There were around $5,400,000 new and existing home sales in the 3rd quarter, a 10% decrease from the prior quarter and a 21% decrease from the Q3 of last year. Renters also continue to face affordability challenges. We now expect annual rent growth across all classes to be in the 5% to The mortgage lenders are seeing a dramatic reduction in origination volume. We estimate 514,000,000,000 dollars in single family mortgage originations in the 3rd quarter, a 24% decrease from the prior quarter in a 54% decrease from the Q3 of last year. Given rising interest rates, home loan application volume has dropped dramatically and the mix of business has changed with significantly fewer refinances than in previous quarters.
As a result, the market is seeing notable impacts on lender business models and activities. Now consistent with this lower level of activity, Fannie Mae has seen less business volume. Our single family acquisitions fell by 32% compared to the previous quarter and by 60% compared to the Q3 of 2021. 79% of our acquisition volumes in the Q3 were purchased mortgages, the highest share we have seen for at least 2 decades. In multifamily, our acquisitions declined to $15,900,000,000 down from $18,700,000,000 the prior quarter.
Despite these headwinds, Fannie Mae provided $134,000,000,000 in financing in the 3rd quarter to single family and multifamily markets, which supported 527,000 units of housing. More than 45% of our single family home purchase acquisitions in the for the Q3 of 2022 were to first time homebuyers. In over 95% of the multifamily units we financed in the Q3 of 2022 that were potentially eligible for HousingGoals credit were affordable to those earning at or below 120% of the median income in their area, providing support for both workforce housing and affordable housing. As these numbers demonstrate, we are intently focused on our role as a liquidity provider through all market conditions, including today's. In order to fulfill that role responsibly for the renters and borrowers we serve and for the broader housing finance system, we need to successfully manage risk on both our acquisitions and our $4,000,000,000,000 book of business.
We have in place strong underwriting and loan quality standards and improved technology, which makes us and the housing finance system better prepared for a potential downturn. Let me call out a couple of examples about our single family guarantee book of business to support this. Fixed rate loans comprised 99% of our book at the end of the Q3. This means that these borrowers will not be subject to payment shocks on their mortgages in a rising interest rate environment. And looking at the credit quality of our book As of the end of the Q3, you'll see a weighted average mark to market loan to value ratio of 50% and a weighted for the Q1 of 2019.
Beyond the credit quality of our book, we also have effective By effectively managing risk and strengthening the company, we're also strengthening our ability to deliver on our mission. We strongly believe that safety and soundness and mission reinforce each other. In this economic environment, the industry is looking to Fannie Mae to be a stable pillar for the market and also for our leadership on housing affordability and equity. Recently, FHFA announced some changes aimed at enhancing affordability and transparency, while also maintaining safety and soundness. These include revisions to our pricing framework and an update to the credit score model we and others in the industry use as part of the mortgage process.
We will be working with FHFA and the industry to implement these enhancements. So as we move through this period of economic uncertainty, We're doing so from a position of relative strength, but we also know we can't be complacent. While we currently expect GDP growth to be essentially flat for 2022. We continue to believe that a modest recession is likely to occur beginning in the Q1 of next year. We expect mortgage rates to stay elevated through the end of this year and in 2023.
We expect additional home price declines in the 4th for the Q2. More specifically, we expect national home price declines of 1.9% in the second half of this year for questions. And home price declines of 1.5 percent next year. This is a shift from our expectations last quarter when we forecasted home price growth in these periods. We project that elevated mortgage rates and a slowing economy will continue to challenge affordability and for the remainder of this year and into next year.
We expect single family multifamily housing starts to further decline compared with 2022 due to the economic constraints already discussed. So now I'll turn it over to Chrisa to address our Q3 results in more detail.
Thank you, Dave. As Dave mentioned, we reported 2 point for $4,000,000,000 of net income in the 3rd quarter, a decrease of $2,200,000,000 compared to the Q2 of 2022. We also recorded $7,200,000,000 of net revenues this quarter, an 8% decrease compared to the $7,900,000,000 of net revenues in the 2nd quarter. I'll reflect on 2 primary drivers of our results for the quarter, both of which were impacted primarily by the macroeconomic factors Dave addressed in his remarks. 1st, Credit related expense.
Credit related expense increased from $251,000,000 in the 2nd quarter to $2,500,000,000 in the Q3 of 2022. Our credit related expense in the 3rd quarter Was primarily driven by the decreases in actual and forecasted home prices Dave discussed. While borrowers have built up Strong equity in their homes as seen in the average mark to market loan to value ratio of our book of business, Lower home prices increase the likelihood that loans will default and increase the amount of credit loss on loans that do default, which impacts our estimate of losses and increases our provision for credit losses. As part of our ongoing analysis of our loss allowance, We also reviewed our provision for credit losses as a result of recent hurricanes. We expect that some borrowers Single family loans and forbearance may increase as a result of borrowers affected by the hurricanes requesting forbearance.
Despite these factors, we concluded that our credit loss models appropriately reflect the potential impact of these recent hurricanes based on our historical loss experience and our current assessment of conditions. We will continue to monitor the impacts of hurricanes Anne and Fiona. We'll be looking at loan performance, changes to expectations surrounding insurance coverage, and also the amount and availability of federal and state assistance to affected borrowers. These factors could change our estimate of credit losses relating to the hurricanes in future periods. 2nd, net interest income.
Net interest income declined $684,000,000 from $7,800,000,000 to $7,100,000,000 compared to the 2nd quarter, primarily driven by reduced amortization income. Amortization income was lower because the higher interest rate environment resulted in lower refinancing activity and thus fewer loan prepayments. I'd now like to highlight a few notable trends in our single family business. As Dave mentioned, 79% of our acquisition volumes in the Q3 were purchase mortgages. As the share of home purchase acquisitions increased, We saw a relative increase in the percentage of our single family loan acquisitions with loan to value ratios over 80% from 34% of acquisitions in the Q2 of 2022 to 38% in the Q3 of 2022.
Acquisition FICO scores averaged 746 in the Q3 of 2022, flat compared with the Q2 of 2022. While Dave provided some statistics on the health of our overall single family guarantee book of business, I'll also add That our serious delinquency or SEQ rate decreased 12 basis points to 0.69% as of September 30, 2022 compared with 0.81% as of June 30, 2022. This decrease is primarily attributable to loans continuing to successfully exit forbearance, mainly through And as we continue to manage the credit risk on our single family book of business, Fannie Mae entered into 6 single family credit risk transfer transactions during the quarter, referencing $134,000,000,000 in unpaid We acquired $15,900,000,000 of multifamily loans in the Q3 of 2022, a decrease of $2,800,000,000 compared with the Q2 of 2022. The bulk of these acquisitions provided vital support for both workforce and affordable housing. As of the end of the Q3, approximately $27,000,000,000 remained under our $78,000,000,000 multifamily volume cap for 2022.
The credit profile of our multifamily book of business remains strong with a weighted average original loan to value ratio of 65% and a weighted average debt service coverage ratio of 2.2 times. Our multifamily SDQ rate declined to 26 basis points as of September 30, 2022, from 34 basis points as of June 30, 2022, as loans continue to recover from the 19 pandemic. The multifamily SDQ rate excluding loans that have received a forbearance since the start of the pandemic was 4 basis points as of September 30, 2022. In addition, In September, we entered into a new CRT deal transferring $339,000,000 of credit risk on a $13,000,000,000 reference pool of acquisitions through our MSIRT program. This will be our only multifamily CRT deal of the year.
Next, I'd like to touch upon our capital position. As of September 30, 2022, We had a $258,000,000,000 shortfall to the amount of capital needed to be fully capitalized, a $4,000,000,000 Improvement from June 30, 2022. This improvement was primarily the result of an increase in our retained earnings and lower capital requirements. Lower capital requirements were due to single family CRT issuances as well as home price changes that occurred in the second quarter. As our capital calculations incorporate home price changes on a 1 quarter lag basis.
It's important to note that the calculation of available capital under the enterprise regulatory capital framework Excludes the stated value of our senior preferred stock and deferred tax assets, both of which are included in the calculation of our net worth. I'll now expand on a few of Dave's remarks on the broader economy and impacts to Fannie Mae. As a result of higher mortgage Rates and inflation continuing to weigh on affordability, we further revised downward our forecast for 2022 single family Mortgage Market Originations. We now expect 2022 single family mortgage market originations of $2,300,000,000,000 a 49% decrease from 2021 with approximately 70% of activity for the full year of 2022 expected to come from purchase originations. We currently project a further decline in single family mortgage Originations in 2023 to $1,700,000,000,000 with 77% of that activity coming from purchase originations.
We expect that multifamily mortgage market originations for 2022 will be between $400,000,000,000 and $430,000,000,000 down from the $475,000,000,000 we estimated at the start of this year, due primarily to rising interest rates and a slowing in multifamily property sales. Given the amount of credit related We recognized in the 1st 9 months of 2022. We expect significant credit related expense in 2022 compared with significant credit related income in 2021. We also expect much lower amortization income in 2022 compared for the Q1, driven by significantly less refinancing activity in 2022 due to a higher mortgage interest rate environment. However, we expect this decline in amortization income to be largely offset by increases in net interest income from portfolios and increases in base guarantee fee income.
We expect these factors to result in lower net income in 2022 compared with 2021. Before I turn it back to Dave, I'd like to remind our audience that we provide additional data and commentary on our economic and housing outlook on our website. We have also published a financial supplement with today's filing that provides additional insights into our business. With that, I'll turn it back to you, Dave.
Okay. So before we sign off, I would like to mention that this will be my final quarterly earnings call as Interim CEO. We're excited to welcome our new CEO, Priscilla Almodovar, who will be with us beginning in December. It's been a pleasure to serve Fannie Mae and promote its important mission these last several months, and I look forward to supporting our new CEO as I continue in my role as Fannie Mae's President. Thank you again for joining us.
We look forward to speaking with you again next quarter. Thank you, ladies and gentlemen. That concludes today's call. You may disconnect.