Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a pre-tax net loss of $40 on each loan they originated in the fourth quarter of 2024, a decrease from the reported net profit of $701 per loan in the third quarter of 2024, according to the Mortgage Bankers Association’s (MBA) newly released Quarterly Mortgage Bankers Performance Report.

“Net production losses resumed in the fourth quarter of 2024 after two consecutive quarters of modest gains,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “This decrease marks the ninth quarter of net production losses in the past three years, albeit a much smaller loss compared to the fourth quarters of 2022 and 2023.”

According to Walsh, fourth-quarter production revenues and volume were relatively flat compared to the third quarter of 2024, while average production expenses increased. Expenses related to the uptick of applications in the third quarter were likely recognized in the fourth quarter. Additionally, while per-loan expenses increased across lenders of all sizes, lenders with larger volume benefitted from scale, as fixed costs were spread over more volume, and they were able to generate an average production profit in the fourth quarter. Meanwhile, lenders with lower production volume struggled to break even.

“With the slowing in prepayments in the fourth quarter, net servicing financial income improved and helped the bottom line. Across both production and servicing operations, 61 percent of mortgage companies in MBA’s sample were profitable, compared to 71 percent in the previous quarter,” added Walsh.

Key Findings of MBA’s Fourth-Quarter 2024 Quarterly Mortgage Bankers Performance Report include:

• The average pre-tax production loss was 4 basis points (bps) in the fourth quarter of 2024, down from the reported profit of 18 bps in the third quarter of 2024, but less than the loss of 73 basis points one year ago. The average quarterly pre-tax production profit, from the fourth quarter of 2008 to the most recent quarter, is 41 basis points.
• The average production volume was $540 million per company in the fourth quarter, down from $542 million per company in the third quarter. The volume by count per company averaged 1,609 loans in the fourth quarter, down from 1,642 loans in the third quarter.
• Total production revenue (fee income, net secondary marketing income, and warehouse spread) decreased to 339 bps in the fourth quarter, down from 341 bps in the third quarter. On a per-loan basis, production revenues decreased to $11,190 per loan in the fourth quarter, down from $11,417 per loan in the third quarter.
• Total loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – increased to 344 basis points in the fourth quarter of 2024 from 323 basis points in the third quarter of 2024. Per-loan costs increased to $11,230 per loan in the fourth quarter, up from $10,716 per loan in the third quarter of 2024. From the fourth quarter of 2008 to last quarter, loan production expenses have averaged $7,628 per loan.
• The purchase share of total originations, by dollar volume, was 78 percent. For the mortgage industry as a whole, MBA estimates the purchase share was at 62 percent in the fourth quarter of 2024.
• The average loan balance for first mortgages increased to $363,795 in the fourth quarter, up from $361,518 in the third quarter.
• Servicing net financial income for the fourth quarter (without annualizing) was $142 per loan, up from a loss of $25 per loan in the third 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 $84 per loan in the fourth quarter, down from $93 per loan in the third quarter.
• Including all business lines (both production and servicing), 61 percent of the firms in the report posted pre-tax net financial profits in the fourth quarter of 2024, down from 71 percent in the third quarter of 2024.

MBA's Mortgage Bankers Performance Report series offers a variety of other performance measures on the mortgage banking industry including revenue and cost breakouts, productivity, product mixes for originations and servicing volume, and pull-through rates. MBA's Mortgage Bankers Performance Report is intended as a financial and operational benchmark for independent mortgage companies, bank subsidiaries and other non-depository institutions. Eighty-two percent of the 338 companies that reported production data for the fourth quarter of 2024 were independent mortgage companies, and the remaining 18 percent were subsidiaries and other non-depository institutions.