Imbs Narrow Losses Even As Mortgage Production Falls

Mortgage companies delivered a pretax net loss of $28 per loan in the first quarter of 2025, reflecting an improvement in financial performance compared to a $40 loss in the previous quarter.

The data, released on Friday, comes from a Mortgage Bankers Association (MBA) report covering 332 independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks.

“Production profitability was close to break-even in the first quarter of 2025 despite a decline in volume and an increase in production expenses,” Marina Walsh, MBA’s vice president of industry analysis, said in a statement. “Production revenues increased at about the same pace as costs, which mitigated losses.”

Across their origination and servicing channels, 58% of the firms in the report posted pretax net profits in Q1 2025, down from 61% in Q4 2024.

Lenders with lower production volumes continued to struggle the most, according to Walsh. Companies with less than $100 million in volume posted average losses of $1,000 per loan in Q1 2025, while those with average loan balances below $250,000 recorded production losses of more than $1,300 per loan.

Overall, companies produced 10% fewer loans from January through March compared to the prior three months. But the majority of originations (81%) were purchase mortgages, up from the industry average of 65% for the same period.

Among the companies that reported production data for Q1 2025, 82% were IMBs, while the remaining 18% were subsidiaries or other non-depository institutions.

Other key findings from the report:

• Average pretax production: Loss of 7 basis points in Q1 2025 compared to a 4-bps loss in Q4 2024
• Average production volume: $488 million in Q1 2025; $540 million in Q4 2024.
• Average loan balance (first and second liens, HELOCs, others): $346,714 in Q1 2025; $347,794 in Q4 2024.  
• Production revenue (fee income, net secondary marketing income and warehouse spread): $12,551 per loan (373 bps) in Q1 2025; $11,190 per loan (339 bps) in Q4 2024.  
• Production expenses (commissions, compensation, occupancy, equipment and others): $12,579 per loan (381 bps) in Q1 2025; $11,230 per loan (344 bps) in Q4 2024.
• Servicing net financial income (without annualizing): $22 per loan in Q1 2025; $142 per loan in Q4 2024. 
• Servicing operating income (excludes MSR amortization, changes in valuation net of hedge and sales): $90 per loan in Q1 2025; $84 per loan in Q4 2024.