AGNC Investment Corp. (AGNC): PESTLE Analysis [Nov-2025 Updated]

You're invested in AGNC Investment Corp., so you know its success hinges on navigating the tightrope of interest rate risk and high leverage. As of late 2025, the macro-environment is defined by a still-hawkish Federal Reserve, making the Political and Economic factors-like the yield curve shape and the cost of repo financing-absolutely critical. We're seeing AGNC manage a leverage ratio near 9.0x to 10.0x equity while trying to sustain a dividend around $1.44 per share, and honestly, a 25 basis point rate surprise can shift their mark-to-market value dramatically. Here is the PESTLE analysis that maps those near-term risks and opportunities to clear actions for your portfolio.

AGNC Investment Corp. (AGNC) - PESTLE Analysis: Political factors

You need to map out the political landscape for a mortgage Real Estate Investment Trust (mREIT) like AGNC Investment Corp., and the truth is, the political environment is the market for them. The Federal Reserve and Congress are not just players; they set the rules of the game. Your near-term focus should be on interest rate policy and the long-simmering housing finance reform, both of which directly impact AGNC's core profitability.

Federal Reserve interest rate policy remains the dominant factor, directly influencing borrowing costs and net interest margin.

The Federal Reserve's (Fed) monetary policy is the single most critical political factor for AGNC, as it dictates the cost of their short-term funding-mostly through repurchase agreements (repo)-and the yield on their long-term assets, Agency Mortgage-Backed Securities (MBS). This spread is their net interest margin (NIM).

The Fed has been in an easing cycle in late 2025. The Federal Open Market Committee (FOMC) lowered the federal funds rate by 25 basis points (bps) at its October 2025 meeting, setting the new target range at 3.75%-4.00%. This was the second cut in as many months, signaling a political and economic shift toward supporting the labor market. This rate reduction directly lowers AGNC's borrowing costs. For context, AGNC's weighted average interest rate on its repurchase agreements was already at 4.38% as of September 30, 2025.

The impact of the Fed's actions on AGNC's profitability is clear in the 2025 fiscal year data:

The annualized net interest spread declined by 34 bps from Q1 to Q3 2025, even as the repo rate slightly eased, showing the complexity of managing a portfolio where asset yields are also falling, or where hedging costs are rising. The Fed also announced it will conclude the reduction of its aggregate securities holdings-quantitative tightening-on December 1, 2025. This is a defintely bullish signal for MBS liquidity.

US government housing finance reform, particularly concerning Fannie Mae and Freddie Mac, affects the liquidity and cost of Agency Mortgage-Backed Securities (MBS).

The political debate over the future of Fannie Mae and Freddie Mac (the Government-Sponsored Enterprises, or GSEs) is a perennial risk for AGNC, whose investment portfolio was comprised of $76.3 billion in Agency MBS as of September 30, 2025. The core issue is whether to release the GSEs from conservatorship, which has been in place for over 17 years.

Any move to end the conservatorship and privatize the GSEs without an explicit government guarantee on their MBS could cause the spread between the 10-year Treasury and 30-year fixed-rate mortgages to widen significantly, potentially by 100 basis points or more. This would negatively impact the value of AGNC's primary assets. However, the current administration has stated the U.S. Government will keep its implicit guarantees.

• Credit Score Reform: The Federal Housing Finance Agency (FHFA) has made administrative changes, such as eliminating the minimum FICO credit score requirement from Fannie Mae's loan processing software, effective November 16, 2025.
• New Products: The GSEs' new 'Duty to Serve' plan for 2025-2027 went into effect on January 1, 2025, which mandates them to support affordable housing markets. This could introduce new, potentially less liquid, types of Agency MBS into the market.

The political push to privatize is a major long-term risk that could destabilize the Agency MBS market, even if the near-term administrative changes are focused on expanding borrower access.

Treasury Department debt issuance schedule impacts the supply/demand dynamics for fixed-income assets, competing with MBS.

The sheer volume of U.S. Treasury debt issuance directly competes with Agency MBS for capital from fixed-income investors. The total outstanding federal debt reached $37.4 trillion as of September 3, 2025. This massive supply of a risk-free alternative puts upward pressure on the yields AGNC must offer on its assets to remain competitive.

The political process around the debt limit is also a factor. The limit was reinstated at $36.1 trillion on January 2, 2025, and subsequently raised by $5 trillion to $41.1 trillion in July 2025. This massive increase in authorized borrowing signals continued high supply of Treasury securities well into 2026, forcing AGNC to manage its portfolio against a persistent supply headwind from the safest asset class.

Potential shifts in capital gains tax policy could influence investor appetite for high-dividend mREIT stocks like AGNC.

AGNC is structured as an mREIT, which requires it to distribute at least 90% of its taxable income to shareholders, resulting in a high dividend yield that is often taxed as ordinary income, not qualified dividends. However, the political debate around capital gains tax is still relevant because it affects the overall attractiveness of high-yield, high-taxed income streams versus lower-yield, lower-taxed capital appreciation.

The most significant tax policy crossroad is the expiration of many Tax Cuts and Jobs Act (TCJA) provisions at the end of 2025. A key proposal from one political faction was to raise the long-term capital gains tax rate to 39.6% for individuals earning over $1 million. Conversely, the current administration's 'One Big Beautiful Bill Act' extended the existing long-term capital gains tax structure, keeping the top rate at 20% for high earners in 2025.

If the capital gains rate were to rise sharply in 2026, it could theoretically make the predictable, high-payout structure of mREITs more attractive relative to growth stocks, which rely more on capital appreciation. Still, the current status quo for 2025 is a continuation of the existing, favorable long-term capital gains rates.

Action: Portfolio Managers should model the impact of a 10 percentage point rise in the top capital gains tax rate on AGNC's stock valuation relative to a representative S&P 500 growth stock by Q1 2026.

AGNC Investment Corp. (AGNC) - PESTLE Analysis: Economic factors

The core of AGNC Investment Corp.'s business model is anchored to the macro-economic environment, specifically the Federal Reserve's monetary policy and the resulting interest rate structure. You should know that the recent shift to a more normal, upward-sloping yield curve as of late 2025, combined with moderating but persistent inflation, is the key economic dynamic defining the firm's profitability.

AGNC's success hinges on maintaining a positive net interest spread (NIS)-the difference between the yield on its Agency Mortgage-Backed Securities (MBS) assets and its funding costs. This spread is under constant pressure from interest rate volatility, which is why the firm's risk management is so critical. Honestly, in this business, a basis point move can change everything.

Continued high, though moderating, inflation pressures affect the long-term rate environment and the cost of hedging AGNC's portfolio.

While inflation has cooled from its peak, it remains a central concern, directly impacting the cost of funds and the effectiveness of hedging. As of September 2025, the annual U.S. headline Consumer Price Index (CPI) inflation rate stood at 3.0%, with forecasters projecting a quarterly average of around 3.1% for Q4 2025. This persistent, above-target inflation keeps pressure on the Federal Reserve to maintain a relatively higher-for-longer policy stance, which in turn elevates AGNC's repurchase agreement (repo) financing costs.

This inflationary environment makes AGNC's hedging strategy more expensive. For the third quarter of 2025, the weighted average interest rate on the company's repurchase agreements was 4.38%, a slight improvement but still a significant cost. To mitigate this risk, AGNC uses interest rate swaps, with a notional amount of $48.1 billion as of September 30, 2025, to lock in a fixed-rate payment, which had an average fixed pay rate of 2.47%. This cost is a direct function of the market's long-term rate expectations, which are still elevated by inflation fears.

Yield curve shape (e.g., inversion or steepening) dictates AGNC's spread income, which is the core of its business model.

The shape of the U.S. Treasury yield curve is the single most important factor for an Agency mREIT (mortgage real estate investment trust). AGNC profits from a positively sloped curve-a steepening curve-where long-term rates (asset yields) are significantly higher than short-term rates (funding costs). As of mid-November 2025, the curve has normalized from its previous inversion, now showing a positive spread: the 10-year Treasury yield was around 4.14%, while the 2-year yield was lower at 3.62%, resulting in a 10Y-2Y spread of approximately 0.52%.

This upward-sloping curve is favorable, as it directly supports the net interest spread, which was an annualized 1.78% for AGNC in Q3 2025. The positive spread environment helped the company generate a net spread and dollar roll income of $0.35 per common share for the quarter. A return to an inverted curve would immediately compress this spread, forcing a reduction in profitability and increasing interest rate risk.

Housing market stability is crucial, as a sharp downturn could pressure MBS valuations, though Agency MBS carry minimal credit risk.

AGNC primarily invests in Agency MBS, which are securities guaranteed by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac. This guarantee means the securities have virtually no credit risk-you won't lose money if the homeowner defaults. But still, the housing market matters a lot for valuation.

The risk lies in the valuation of the MBS, which can fall during a housing downturn due to market illiquidity or widening mortgage spreads (the difference between MBS yields and Treasury yields). The 30-year fixed mortgage rate, a key driver, was around 6.24% in November 2025. AGNC's management noted that Agency MBS outperformed U.S. Treasuries for five consecutive months leading up to Q3 2025, suggesting a constructive environment where spreads were either maintained or narrowed, which is beneficial for the valuation of their massive $90.8 billion investment portfolio.

AGNC's leverage ratio, historically around 9.0x to 10.0x equity, is highly sensitive to economic volatility and capital availability.

Leverage amplifies returns, but it also magnifies losses in volatile markets. AGNC's tangible net book value 'at risk' leverage ratio was 7.6x as of September 30, 2025, and the average for the third quarter was 7.5x. This is below the historical range of 9.0x to 10.0x, indicating a more cautious, risk-managed posture in the current environment.

The decision to maintain a lower leverage protects the company's book value from sharp interest rate swings, and allows it to opportunistically deploy capital when market conditions improve. The capital is defintely available, as the company successfully raised $345 million of Series H Preferred Stock and over $300 million of common stock during Q3 2025, demonstrating strong access to capital markets.

Here's the quick math on their Q3 2025 economic positioning:

Next Step: Portfolio Managers should model a 50 basis point re-inversion of the 10Y-2Y curve to stress-test the current 7.6x leverage ratio by the end of the year.

AGNC Investment Corp. (AGNC) - PESTLE Analysis: Social factors

Demographic shifts, like the large Millennial cohort entering prime home-buying age, drive long-term demand for the underlying mortgages.

You're looking at a huge wave of first-time homebuyers, and that's a powerful tailwind for AGNC Investment Corp. The Millennial generation, currently the largest adult cohort in the US, is now firmly in their prime home-buying years, typically ages 35 to 45. This demographic pressure creates sustained, long-term demand for the Agency Mortgage-Backed Securities (MBS) that AGNC holds.

Here's the quick math: Even with high interest rates, the sheer number of households-estimated to be over 72 million Millennials-translates into a massive need for housing and, by extension, mortgages. This demand helps stabilize the underlying collateral value of AGNC's portfolio, which is critical for a mortgage Real Estate Investment Trust (mREIT). To be fair, affordability issues are slowing the pace, but the structural demand is defintely there.

This demographic shift is one of the most reliable long-term drivers in the US housing market.

• Millennials drive 50% of all new mortgage applications.
• Cohort size stabilizes MBS demand.
• Sustained housing need supports collateral.

Investor preference for income-generating assets keeps demand high for AGNC's dividend, which has been around $1.44 per share annually.

Individual investors and retirees are constantly hunting for reliable income, and AGNC's consistent dividend is a major draw. The company's annual dividend has been around $1.44 per share, paid monthly, which translates into a compelling yield in a low-yield world. This preference for income-generating assets fuels demand for AGNC's stock, supporting its valuation and providing a stable source of equity capital.

This is a core social factor: a large segment of the US population prioritizes cash flow over pure capital appreciation. So, when the market gets choppy, the steady monthly payment acts as a psychological buffer for many investors, keeping them invested. Still, you have to watch the dividend payout ratio-it needs to be covered by net interest income over time to be sustainable.

Growing public scrutiny on corporate tax structures and financial sector stability influences overall sentiment toward mREITs.

The public and political climate around financial institutions has changed dramatically since 2008. There is growing scrutiny on corporate tax structures, and mREITs like AGNC operate under a specific structure that requires them to distribute at least 90% of their taxable income to shareholders. This avoids corporate tax at the entity level, which is a lightning rod for criticism during periods of high corporate profitability.

This public sentiment, while not a direct regulation yet, influences the overall 'social license to operate' for the financial sector. Any perceived instability or aggressive tax avoidance can quickly erode investor confidence and attract unwanted regulatory attention. Plus, the complexity of the mREIT business-using significant leverage (AGNC's leverage ratio was recently near 7.0x)-makes it an easy target for media narratives about financial risk.

Remote work trends are subtly altering housing demand patterns across different US geographies, impacting collateral value over time.

The shift to hybrid and fully remote work is fundamentally changing where people choose to live. This is not just a temporary fad; it's a permanent social change. For AGNC, this means the value of the underlying collateral (the homes) is shifting geographically. Demand is moving away from expensive, dense urban cores like San Francisco and Manhattan toward more affordable, spacious secondary markets like Boise, ID, or Raleigh, NC.

This is a slow-burn risk and opportunity. On one hand, it diversifies AGNC's collateral across a broader geographic base, which is good for risk management. On the other, it introduces uncertainty into the long-term valuation models for mortgages tied to previously high-growth, high-cost urban areas. For example, while home prices in the Mountain West region saw median price growth of over 15% year-over-year in a recent period, some coastal urban markets saw that growth rate slow to single digits.

• Demand shifts to Sunbelt and Mountain West.
• Collateral value diversifies geographically.
• Urban core price growth decelerates.

AGNC Investment Corp. (AGNC) - PESTLE Analysis: Technological factors

You might think a mortgage real estate investment trust (mREIT) like AGNC Investment Corp. is just a balance sheet play, but honestly, technology is now a core competitive edge. It's not about building a flashy app; it's about using data science to manage the immense interest rate and prepayment risks inherent in a portfolio that totaled over $90.8 billion as of September 30, 2025. The biggest factor here is the speed and precision of risk management, which is entirely dependent on advanced tech.

Advanced data analytics and machine learning are used to optimize portfolio hedging strategies and predict prepayment speeds on MBS.

The ability to predict when a homeowner will refinance-the Constant Prepayment Rate (CPR)-is the single most important variable for an Agency MBS investor. You need to get this right, or your premium amortization costs will eat your returns. AGNC is defintely prioritizing this, announcing a new Head of Investment Research and Strategy role in March 2025 to focus on incorporating enhanced data and analytical capabilities.

For context, AGNC's weighted average actual CPR for the third quarter of 2025 was 8.3%, a number that data models constantly try to forecast. Better machine learning models mean more accurate hedging, which is critical when your hedge portfolio covered 89% of funding liabilities as of mid-2025. They even partnered with Intercontinental Exchange (ICE) in October 2025 to launch three new Agency MBS indices, a move that provides proprietary market insights and performance data to feed those advanced models.

Increased automation in fixed-income trading platforms reduces transaction costs but also compresses trading margins.

The fixed-income market is rapidly 'electronifying,' meaning more trading is happening on automated platforms instead of over the phone. For a massive institutional investor like AGNC, this is a double-edged sword. Automation can cut transaction costs by as much as 10% compared to manual execution, which is a significant operational saving when you are transacting billions of dollars in repurchase agreements and derivatives.

But here's the quick math: if all your competitors are using similar automated trading systems, the price discovery becomes faster and more transparent. This efficiency compresses the small trading margins (the alpha) you might capture on execution. The adoption rate for automated trading in broker-dealers in North America already surpasses 60% in 2025, so this is now the cost of doing business, not a unique advantage.

• Automated trading adoption: Over 60% of broker-dealer volume in 2025.
• Transaction cost reduction: Up to 10% versus manual trading.
• Impact: Lower operational costs but intensified margin pressure on execution.

Digital mortgage origination speeds up the creation of new MBS supply, potentially impacting pricing efficiency.

The rise of digital mortgage platforms, which use AI for accelerated underwriting and processing, is fueling a surge in new loan volume. Faster origination means a faster, more predictable supply of new Agency MBS hitting the market. For 2025, total U.S. mortgage originations are estimated to reach $2.3 trillion, representing a substantial 28% increase over the prior year. Purchase originations alone are forecast to be $1.46 trillion.

This high-volume, high-speed supply chain is generally good because it ensures liquidity for AGNC's core asset class. However, it also means that market pricing must adjust almost instantly to the new supply dynamics. This rapid creation of new securities, particularly with 30-year fixed rates averaging around 6.62% in the first half of 2025, requires AGNC's trading desk to have real-time data feeds and models to ensure they are acquiring new bonds at the most efficient price.

Cybersecurity risk is a constant threat to the integrity of AGNC's trading and financial reporting systems.

When you manage nearly a hundred billion dollars in assets, your biggest non-market risk is a systemic technology failure. The financial sector is a prime target, and the global cost of cybercrime is projected to hit $10.5 trillion annually by 2025. AGNC, as a highly leveraged and electronically traded entity, is exposed to both data breaches and operational disruption.

A single data breach in the financial services industry has an average cost of $4.45 million, but for a firm like AGNC, the reputational damage and the risk of trading system downtime could be far greater. You can't afford to have your trading systems compromised, even for a few hours, when managing a portfolio of this size. This necessitates continuous, heavy investment in sophisticated network security, data encryption, and robust disaster recovery protocols.

Next step: Investment Research and Strategy team: complete a formal technology audit of all prepayment modeling systems by the end of the quarter, focusing on machine learning model drift.

AGNC Investment Corp. (AGNC) - PESTLE Analysis: Legal factors

You need to understand that for a mortgage Real Estate Investment Trust (mREIT) like AGNC Investment Corp., legal and regulatory factors aren't just about compliance; they are direct drivers of your funding costs, tax efficiency, and operational risk. The 2025 landscape shows a mix of regulatory relief on the tax front but persistent, costly scrutiny on funding and disclosure.

Stricter Dodd-Frank Act capital and liquidity requirements for counterparties (banks) can increase the cost of repurchase agreements (repo financing) for AGNC.

The core of AGNC's business model relies on repurchase agreements (repo financing) with major financial institutions, which are the primary dealers. Post-Dodd-Frank Act rules, particularly the Supplementary Leverage Ratio (SLR), require these bank counterparties to hold more capital against their balance sheet assets, including the U.S. Treasury and Agency Mortgage-Backed Securities (Agency MBS) collateral involved in repo transactions. This makes bank balance sheet capacity a finite, expensive resource.

This increased cost of capital for banks translates directly into a higher funding cost for AGNC. To be fair, AGNC is managing this cost well, but the regulatory floor is still high. For the third quarter of 2025, AGNC's Investment Securities Repo had a weighted average interest rate of 4.38%, funding a massive $69.0 billion in repurchase agreements as of September 30, 2025. The high volume of repo funding, coupled with the regulatory pressure on bank balance sheets, means any future tightening of capital rules-or even the failure to make temporary exemptions permanent-would immediately push this 4.38% rate higher, squeezing the net interest spread.

Ongoing SEC scrutiny of mREIT disclosures, particularly around valuation models and risk management, demands high compliance spending.

The Securities and Exchange Commission (SEC) has made it clear in its 2025 Examination Priorities that it is intensely focused on certain areas that are central to AGNC's operations. This is a direct cost driver for the firm, requiring significant investment in compliance staff, technology, and external legal counsel. You simply cannot afford to be sloppy here.

The SEC is specifically scrutinizing advisers to private funds and other leveraged entities on their valuation of illiquid or hard-to-value assets and those sensitive to higher interest rates. Since Agency MBS can be complex to value during periods of market volatility, AGNC must demonstrate a robust, defensible, and consistently applied valuation methodology. The compliance burden is substantial, covering:

• Verifying that disclosures align with actual risk management practices.
• Scrutinizing the valuation models for interest-rate-sensitive and leveraged products.
• Ensuring fiduciary obligations are met during periods of market volatility.

Here's the quick math: managing a portfolio with $69.0 billion in repo debt and $48.1 billion in notional interest rate swaps requires a compliance team that is defintely top-tier, and that costs millions annually, even if a specific public figure for AGNC's compliance budget is unavailable.

Tax law changes affecting REIT status or corporate interest deductibility could fundamentally alter AGNC's operating model.

The 'One Big Beautiful Bill Act' signed in July 2025 provided significant, favorable certainty for AGNC's operating model, which is a huge win. The permanency of key tax provisions removes a major source of long-term strategic risk that was scheduled to hit at the end of the year.

Specifically, the changes permanently address the corporate interest deductibility limit and the tax treatment of REIT dividends, securing the favorable tax structure that makes mREITs attractive to investors. This stability is crucial for planning capital raises and dividend policy.

New regulations on derivatives and hedging instruments directly affect AGNC's ability to manage interest rate risk effectively.

AGNC uses a massive derivatives portfolio, primarily interest rate swaps, to hedge its interest rate risk. As of September 30, 2025, the Company's pay fixed interest rate swap position totaled $48.1 billion in notional amount. This is how they manage the risk of rising short-term funding costs. New regulations from the Commodity Futures Trading Commission (CFTC) and other global bodies are focused on increasing transparency and standardization in the derivatives market.

While the goal is market stability, the immediate effect is a higher operational and compliance burden on AGNC's treasury and back-office functions. The CFTC, for instance, is enhancing derivatives reporting in 2025 by implementing new data elements and Unique Product Identifiers (UPIs). This means the cost of executing and reporting each hedge transaction rises, even if the actual hedging strategy remains sound. The operational risk of reporting errors is also amplified, and that's a risk you must actively manage.

Next Step: Finance: Draft a sensitivity analysis showing the impact on net interest margin if the weighted average repo rate increases by 10 and 25 basis points due to regulatory capital costs by the end of the quarter.

AGNC Investment Corp. (AGNC) - PESTLE Analysis: Environmental factors

Here's the quick math: A 25 basis point unexpected hike in the Fed Funds rate can wipe millions off the mark-to-market value of a leveraged MBS portfolio, so every factor here is a direct input to your risk model. Finance: defintely keep the 10-year Treasury yield forecast updated weekly.

Increasing focus on climate-related financial risk means AGNC must assess if properties backing its MBS are in high-risk flood or fire zones.

The core risk for AGNC, an investor primarily in Agency mortgage-backed securities (Agency MBS), is not direct property damage but the deterioration of the underlying collateral value and rising default rates due to climate events. A February 2025 study estimated that U.S. real estate values could lose $1.4 trillion over the next 30 years due to climate-related risks, unadjusted for inflation. This financial risk translates directly to the mortgages that comprise AGNC's portfolio.

While AGNC has acknowledged limited visibility into the specific properties backing its Agency MBS, the overall market exposure is clear. As of 2025, approximately 6.1% of homes in the United States, valued at nearly $3.4 trillion, face a severe or extreme risk of flood damage, and 5.6% of homes (worth $3.2 trillion) face severe or extreme fire risk. This is a massive pool of potential collateral impairment that the Agency guarantee does not fully insulate you from, as increased defaults and prepayments can still impact portfolio performance. The growing crisis in property insurance is a major transmission mechanism for this risk; for example, the California FAIR Plan's total exposure rose to $650 billion by June 2025, a 42% increase in just nine months, indicating a rapid retreat by private insurers from high-risk markets. That's a clear signal of rising systemic risk in key housing markets.

Growing investor demand for ESG-compliant funds pressures AGNC to improve its social and governance disclosures.

Investor appetite for Environmental, Social, and Governance (ESG) compliance remains a structural force, despite mixed near-term fund flows. The global sustainable fund universe held $3.5 trillion in assets as of June 2025, creating immense pressure on all major financial entities, including mREITs (mortgage Real Estate Investment Trusts) like AGNC, to provide detailed ESG reporting. While global sustainable funds saw record net outflows of approximately $8.6 billion in Q1 2025, the market quickly rebounded with $4.9 billion in net inflows in Q2 2025, showing the demand is resilient.

AGNC has responded by publishing its fourth annual ESG Report in November 2024, focusing on corporate governance and risk management. For a company whose primary product is a financial instrument, ESG pressure manifests through transparency and impact metrics. The Upright Project, which measures holistic value creation, gives AGNC a net impact ratio of 16.1%, indicating a positive net sustainability impact driven primarily by its contribution to societal infrastructure and jobs. This kind of quantifiable metric is what institutional investors, like BlackRock, are now demanding to justify their allocations.

Potential for new 'green' mortgage-backed securities could create a new, distinct asset class for AGNC to invest in.

The government-sponsored enterprises (GSEs) are actively building out the Green MBS market, creating a new, distinct asset class that AGNC can access to appeal to ESG-mandated funds. These securities are backed by loans for energy-efficient homes. This is a significant opportunity for AGNC to diversify its portfolio within its core Agency MBS mandate.

Key developments in 2025 include:

• Freddie Mac tightened its Single-Family Green MBS standard, lowering the HERS Index score threshold from 60 to 55 starting January 1, 2025, promoting higher energy efficiency.
• Fannie Mae issued over $6.6 billion in Single-Family Green MBS through June 30, 2025.
• Fannie Mae's total infusion into the global green bonds market through Multifamily Green MBS has surpassed $138 billion since 2012 (through June 30, 2025).

As an investor with a $90.8 billion portfolio as of September 30, 2025, AGNC is a primary buyer of Agency MBS and is therefore a major participant in this emerging green asset class. Investing in these securities offers a potential 'greenium'-a tighter spread or lower yield-that is offset by the lower risk profile of energy-efficient homes, which typically have lower utility costs and, thus, lower default risk.

Disclosure requirements related to physical and transition risks are becoming more formalized by bodies like the Financial Stability Board.

Global regulatory bodies are moving quickly to formalize climate risk disclosure, shifting from voluntary frameworks to mandatory standards that will impact AGNC's financial reporting. This is no longer a soft-law issue; it's a compliance issue.

Key 2025 regulatory developments include:

• The Financial Stability Board (FSB) published an analytical framework and toolkit in January 2025 to help financial institutions monitor climate-related vulnerabilities.
• The International Sustainability Standards Board (ISSB) Standards (IFRS S1 and S2) are gaining traction, with 17 FSB member jurisdictions applying them as of September 2024, setting a global baseline for climate-related financial disclosures.
• The Basel Committee on Banking Supervision released a framework for disclosing climate-related financial risks in June 2025, which will influence the capital requirements and risk-weighting of banks that are AGNC's counterparties in repurchase agreements.

This formalization means AGNC must quantify not just the physical risks-like the probability of properties in its collateral pool being hit by a Category 4 hurricane-but also the transition risks, such as the potential devaluation of non-green mortgages if carbon taxes or building efficiency mandates are enacted. The shift requires a new level of risk modeling, moving beyond traditional interest rate and credit risk to incorporate climate scenario analysis.