Fannie Mae on Friday recorded an increase in net income for the first quarter due to its completion of a long-planned switch to hedge accounting.

The accounting change contributed $1.2 billion to a total $5 billion in net income during the quarter, up from $4.6 billion in the fourth quarter of last year and $461 million during the first three months of 2020.

Hedge accounting will on a go-forward basis align Fannie’s reporting with competitor Freddie Mac, and address a mismatch between the recorded value of financial instruments used to offset interest-rate volatility on mortgages, and the loans themselves.

“Now we net these derivative hedges with the fair-value gains or losses with the loans or funding that they are hedging,” Fannie Mae Chief Financial Officer Celeste Mellet Brown said during a media call about the government-sponsored enterprise’s earnings on Friday.

At $6.8 billion, revenues also were up compared to the first quarter of last year, when the comparable figure was $5.5 billion. However, they were down 6% from $7.2 billion in the exceptionally strong fourth quarter.

Like Freddie, Fannie found the level of new loans taken out to refinance old ones remained relatively strong even though there was a relative increase in rates during the quarter.

The refi component of single-family mortgage acquisitions held steady at $301 billion in the first three months of this year compared to the previous quarter, and it was up from $122 billion during the same period in 2020.

Overall, single-family acquisitions totaled $400 billion in the first quarter, down slightly from an exceptionally strong $426 billion the previous fiscal period and $191 billion in the first three months of 2020.