WASHINGTON, September 19 — One hundred dollars in Federal Home Loan Bank advances is linked to roughly eighteen dollars in additional lending, according to a pair of 2025 studies that reached the same conclusion by different routes. The bottom line: more borrowing from the FHLBank System tracks with more home lending, and the figure that matters — the dollar estimate — lands in a similar range whether researchers follow one bank over time or compare many banks at a single moment.
The Federal Home Loan Bank System extends secured loans, known as advances, to member institutions to supply liquidity to the housing finance ecosystem. How much of that borrowed liquidity actually becomes home lending is the question the Urban Institute and the Government Accountability Office each took up separately in 2025.
The two studies are not directly comparable. The Urban Institute follows the same bank over time, asking whether its lending rises in quarters when its advances rise. GAO mostly compares multiple banks in the same quarter, asking whether banks with more advances outstanding also hold more loans outstanding.
Picture it this way. If Bank A carried $50 million in advances last quarter and $60 million this quarter, the Urban Institute approach measures how much Bank A’s residential lending changed — a before-and-after look at one institution.
GAO’s approach asks whether Bank A, holding $60 million in advances, also has more residential loans outstanding than Bank B, a similar bank with $50 million in advances. Two banks, one point in time. Both are reasonable ways to study the relationship.
They answer different questions, so their results describe related but distinct relationships.
Two methods, one direction
The result types differ as well. The Urban Institute estimate is in dollars: $100 more in advances is linked to about $18 more in lending. GAO’s first two estimates are percentages and cannot be compared directly with a dollar figure.
GAO’s third specification can be expressed approximately in dollars. GAO found that a bank whose advances are 1 percentage point higher as a share of assets has about 0.9 percent more residential loans.
Between 2015 and 2024, single-family loans outstanding averaged about 20 percent of FHLBank members’ total assets; all residential loans outstanding, including multifamily, averaged about 32 percent. Applying 0.9 percent to those balances implies that $100 in advances is linked to $18 to $29 more in residential lending. The Urban Institute within-bank estimate sits at the low end of that range.
The Urban Institute also tested an instrumental variable model for the 2010–24 period, addressing the possibility that advances and lending are jointly influenced by an unobserved factor the baseline regression does not control for. That approach produced a substantially larger estimate — consistent with the assumption that the baseline $18 figure is conservative rather than overstated.
Reaching the same basic conclusion through different approaches strengthens the overall evidence.
Size matters, but the evidence is thin
Whether the relationship holds across bank sizes matters because large banks account for most advance dollars, while small and midsize banks make up most of the FHLBanks’ membership and have fewer alternative funding sources. GAO separates banks with more than $10 billion in assets from smaller ones. It finds a larger relationship between advances and lending among banks with more assets, but the result is not statistically significant, meaning the pattern could be attributable to chance.
Large banks account for less than 3 percent of GAO’s observations, which makes a reliable pattern harder to detect. That evidence should be viewed as suggestive rather than conclusive.
The Urban Institute handled bank size differently, taking changes in advances and lending as a share of each bank’s total assets — a common approach in finance research. It then divided its sample into the same groups and found $37 per $100 of advances.
The studies 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 GAO, Federal Home Loan Banks: Role During Financial Stress and Members’ Borrowing Trends and Outcomes (GAO, 2025). What to watch next is whether the size split holds up as more data accumulates.
With large banks such a thin slice of the sample, the question of whether the advances-to-lending link is stronger at the top of the asset ladder remains open.
