New Urban Institute Study Finds Federal Home Loan Bank Advances Lead to Significant Increases in Housing and Community Lending

Advances Generated more than $1.8 Trillion in Additional Total Lending and more than $850 Billion in Additional Real Estate Lending

WASHINGTON, Jan. 14, 2026 (GLOBE NEWSWIRE) -- The Council of Federal Home Loan Banks today highlighted new independent research by the Urban Institute, a nationally respected, nonpartisan think tank based in Washington, D.C., demonstrating the strong connection between increases in Federal Home Loan Bank (FHLBank) advances and growth in housing and community lending.

The study – the second in a three-part Urban Institute research series – analyzes more than two decades of data (2002–2024) and explores the ways that FHLBank liquidity positively impacts FHLBank member institutions’ lending behavior over time, including before and after the 2008 financial crisis. This is the first time an independent research study has been commissioned to examine this direct linkage.

“We believe in the strength of local,” said Ryan Donovan, President and CEO of the Council of Federal Home Loan Banks, the public voice of the FHLBank System. “The FHLBanks exist to provide reliable liquidity to roughly 6,500 financial institutions that anchor local communities and provide an economic lifeline to families and businesses. Urban Institute’s analysis makes clear just how crucial a role FHLBank advances play in driving consumer, mortgage and small business lending, particularly for the nation’s small community lenders. The clear takeaway from this study is that the FHLBanks turn liquidity into action – helping local lenders finance homes, support small businesses, and strengthen the communities they serve.”

Highlights of the study include:

FHLBank Advances Expand Total Lending: Urban Institute researchers found that between 2002-2024 increases in FHLBank advances contributed to more than $1.8 trillion in increased total lending by bank and credit union members.
FHLBank Advances Increase Real Estate Lending: From 2002 to 2024, increases in advances led to approximately $850 billion in additional residential real estate lending by banks and credit unions, underscoring the System’s foundational role in housing finance.
Smaller Institutions Benefit the Most from Advances: Smaller commercial and savings banks increased their lending by an even greater extent, highlighting the importance of FHLBank liquidity for community-based financial institutions.
Community and Small Business Lending Increased: Advances were positively associated with increased lending to small businesses, small farms, and low- and moderate-income households.
Increased Advances Increased Mortgage Originations: A $100 increase in FHLBank advances relative to assets is associated with a $22 increase in mortgage origination volume over assets across the full sample period.
Stronger Effects Post-2008: The relationship between advances and lending was even stronger following the implementation of post-financial-crisis regulatory reforms, when alternative funding sources became more constrained and members increased utilization of FHLBank funding.

The Council of Federal Home Loan Banks commissioned the series of Urban Institute studies to provide independent measurement of how FHLBank advances influence the lending activities of bank and credit union members in both housing finance and community development.

Urban Institute’s analysis draws on quarterly Call Report data, Home Mortgage Disclosure Act (HMDA) records, and Community Reinvestment Act (CRA) data, using multiple econometric approaches to examine the relationship between advances and lending outcomes.

The FHLBanks are member-owned cooperatives and the findings from Urban Institute reaffirm that the FHLBank System is more than a funding source – it is lending that powers communities.

About: The FHLBanks are 11 regionally based, wholesale suppliers of lendable funds to financial institutions of all sizes and many types, including community banks, credit unions, commercial and savings banks, insurance companies, and community development financial institutions. The FHLBanks are cooperatively owned by member financial institutions in all 50 states and U.S. territories. The steady supply of lendable funds from FHLBanks helps U.S. lenders invest in local needs including housing, jobs, and economic growth. The Council of FHLBanks represents all 11 FHLBanks.

CONTACT INFORMATION
Council of FHLBanks
Peter E. Garuccio
202-955-0002 ext. 14
pgaruccio@cfhlb.org

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