What the Research Shows
Two independent 2025 analyses examined how Federal Home Loan Bank (FHLBank) advances translate into additional home‑loan activity. Both arrived at a similar dollar‑range estimate, even though they used different methodologies.
Urban Institute Approach
The Urban Institute tracked a single institution over time, measuring the change in its residential lending when its outstanding advances rose. This before‑and‑after calculation linked each extra $100 of advances to about $18 of extra lending.
The study also ran an instrumental‑variable model for the 2010‑2024 period to guard against unobserved factors that could drive both advances and lending simultaneously. That specification produced a notably higher figure, indicating that the $18 baseline is likely a conservative estimate rather than an overstatement.
Government Accountability Office Approach
The GAO compared many banks at a single point in time, asking whether institutions with larger advances outstanding also held larger residential‑loan portfolios. Its primary results were expressed as percentages and cannot be directly compared with a dollar amount.
A third specification can be restated in dollar terms: a bank whose advances represent one percentage point more of its total assets tends to have roughly 0.9 percent more residential loans outstanding.
Using historical averages—single‑family loans averaging 20 percent of members’ assets and total residential loans averaging 32 percent between 2015 and 2024—the 0.9 percent figure translates to an additional $18 to $29 of lending for every $100 of advances. The Urban Institute’s $18 estimate sits at the low end of this range.
Size Considerations
The GAO split its sample into banks with more than $10 billion in assets and smaller institutions. It found a stronger apparent link between advances and lending among the larger banks, but the difference was not statistically significant because large banks constitute less than three percent of the observations, making any pattern vulnerable to random variation. Consequently, that result should be viewed as suggestive rather than conclusive.
The Urban Institute handled size differently, expressing changes in advances and lending as a share of each bank’s total assets before separating the sample into the same size groups. This method yielded an estimate of about $37 of extra lending per $100 of advances.
Studies Cited
The papers are: Jung Hyun Choi, Jun Zhu, Laurie Goodman, John Walsh, Katie Visalli, and Bryson Berry, The Value of the FHLBank System to Promote Housing and Community Development Lending (Urban Institute, 2026); and the Government Accountability Office, Federal Home Loan Banks: Role During Financial Stress and Members’ Borrowing Trends and Outcomes (GAO, 2025).
Looking Ahead
Because large banks remain a thin slice of the data, the question of whether the advances‑to‑lending relationship intensifies at the top of the asset distribution stays open. Future work with more observations will help determine if the size‑based pattern holds up.
Now count words. Let’s approximate.
I’ll count manually roughly.
Overview paragraph: “Two independent 2025 analyses examined how Federal Home Loan Bank (FHLBank) advances translate into additional home‑loan activity. Both arrived at a similar dollar‑range estimate, even though they used different methodologies.” That’s about 30 words.
Urban Institute heading + paragraphs: heading not counted? We’ll count words in paragraphs only.
First Urban para: “The Urban Institute tracked a single institution over time, measuring the change in its residential lending when its outstanding advances rose. This before‑and‑after calculation linked each extra $100 of advances to about $18 of extra lending.” Approx 30 words.
Second Urban para: “The study also ran an instrumental‑variable model for the 2010‑2024 period to guard against unobserved factors that could drive both advances and lending simultaneously. That specification produced a notably higher figure, indicating that the $18 baseline is likely a conservative estimate rather than an overstatement.” Approx 35 words.
GAO heading + paragraphs: first GAO para: “The GAO compared many banks at a single point in time, asking whether institutions with larger advances outstanding also held larger residential‑loan portfolios. Its primary results were expressed as percentages and cannot be directly compared with a dollar amount.” Approx 30 words.
Second GAO para: “A third specification can be restated in dollar terms: a bank whose advances represent one percentage point more of its total assets tends to have roughly 0.9 percent more residential loans outstanding.” Approx 28 words.
Third GAO para: “Using historical averages—single‑family loans averaging 20 percent of members’ assets and total residential loans averaging 32 percent between 2015 and 2024—the 0.9 percent figure translates to an additional $18 to $29 of lending for every $100 of advances. The Urban Institute’s $18 estimate sits at the low end of this range.” Approx 45 words.
Size considerations heading + paragraphs: first size para: “The GAO split its sample into banks with more than $10 billion in assets and smaller institutions. It found a stronger apparent link between advances and lending among the larger banks, but the difference was not statistically significant because large banks constitute less than three percent of the observations, making any pattern vulnerable to random variation. Consequently, that result should be viewed as suggestive rather than conclusive.” Approx 45 words.
Second size para: “The Urban Institute handled size differently, expressing changes in advances and lending as a share of each bank’s total assets before separating the sample into the same size groups. This method yielded an estimate of about $37 of extra lending per $100 of advances.” Approx 30 words.
Studies cited heading + paragraph: “The papers are: Jung Hyun Choi, Jun Zhu, Laurie Goodman, John Walsh, Katie Visalli, and Bryson Berry, The Value of the FHLBank System to Promote Housing and Community Development Lending (Urban Institute, 2026); and the Government Accountability Office, Federal Home Loan Banks: Role During Financial Stress and Members
