IMBs Report Slight Production Losses In Q1 Of 2025
Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a pre-tax net loss of $28 on each loan they originated in the first quarter of 2025, compared to a net loss of $40 per loan in the fourth quarter of 2024, according to the Mortgage Bankers Association’s (MBA) newly released Quarterly Mortgage Bankers Performance Report.
“Production profitability was close to break-even in the first quarter of 2025 despite a decline in volume and an increase in production expenses,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “Production revenues increased at about the same pace as costs, which mitigated losses.”
According to Walsh, lenders with lower production volume continued to struggle the most. For example, lenders with less than $100 million in dollar volume posted average losses of over $1,000 per loan. In addition, lenders with low average loan balances – less than $250,000 – recorded average production losses of over $1,300 per loan.
Added Walsh, “Accounting for both production and servicing operations combined, 58 percent of mortgage companies in MBA’s sample are profitable, but that leaves 42 percent who are still not yet out of the woods.”
Key Findings of MBA’s First-Quarter 2025 Quarterly Mortgage Bankers Performance Report include:
- The average pre-tax production loss was 7 basis points (bps) in the first quarter of 2025, compared to a loss of 4 bps in the fourth quarter of 2024. The average quarterly pre-tax production profit, from the first quarter of 2008 to the most recent quarter, is 40 basis points.
- The average production volume was $488 million per company in the first quarter, down from $540 million per company in the fourth quarter. The volume by count per company averaged 1,448 loans in the first quarter, down from 1,609 loans in the fourth quarter.
- Total production revenue (fee income, net secondary marketing income, and warehouse spread) increased to 373 bps in the first quarter, up from 339 bps in the fourth quarter. On a per-loan basis, production revenues increased to $12,551 per loan in the first quarter, up from $11,190 per loan in the fourth quarter.
- Total loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – increased to 381 basis points in the first quarter of 2025 from 344 basis points in the fourth quarter of 2024. Per-loan costs increased to $12,579 per loan in the first quarter, up from $11,230 per loan in the fourth quarter of 2024. From the first quarter of 2008 to last quarter, loan production expenses have averaged $7,702 per loan.
- The purchase share of first mortgage originations, by dollar volume, was 81 percent. For the mortgage industry as a whole, MBA estimates the purchase share was at 65 percent in the first quarter of 2025.
- The average loan balance for first mortgages increased to $364,339 in the first quarter, up from $363,795 in the fourth quarter. The average loan balance for total mortgages (firsts, seconds, HELOCs, other) decreased to $346,714 in the first quarter, down from $347,794 in the fourth quarter.
- Servicing net financial income for the first quarter (without annualizing) was $22 per loan, down from $142 per loan in the fourth quarter. Servicing operating income, which excludes MSR amortization, gains/loss in the valuation of servicing rights net of hedging gains/losses, and gains/losses on the bulk sale of MSRs, was $90 per loan in the first quarter, up from $84 per loan in the fourth quarter.
- Including all business lines (both production and servicing), 58 percent of the firms in the report posted pre-tax net financial profits in the first quarter of 2025, down from 61 percent in the fourth quarter of 2024.
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