MBA Reports 4Q IMB Net Losses

Independent mortgage banks and mortgage subsidiaries of chartered banks reported a net loss of $2,812 on each loan they originated in the fourth quarter, the Mortgage Bankers Association reported Friday.

The MBA Quarterly Mortgage Bankers Performance Report said the fourth-quarter net loss compared to a reported loss of $624 per loan in the third quarter.

“For the third consecutive quarter, the average pre-tax net production income was in the red, reaching a new survey low of 99 basis points of loss in the final three months of 2022,” said Marina Walsh, CMB, MBA Vice President of Industry Analysis. “Fourth-quarter results were abysmal. Basis-point revenues dropped to levels not seen since the fourth quarter of 2011. Production costs reached their highest levels since the inception of MBA’s report, and production volume has now declined for eight consecutive quarters.”

Walsh said the past several quarters have been a “challenging time for mortgage originators, with cost-cutting measures, including layoffs, not being enough yet to turn the tide. Even when all business lines are considered – both mortgage production and mortgage servicing – only one in four companies were profitable in the fourth quarter of 2022.”

Walsh noted that average loan balances dropped by 4 percent, indicative of a moderation in home-price growth. Based on MBA’s latest forecast, total industry volume is expected to pick up starting in the second quarter. The 30-year fixed mortgage rate is forecast to decline as the year progresses. 

Key findings of MBA’s Fourth-Quarter Quarterly Mortgage Bankers Performance Report:

  • Average pre-tax production loss fell to 99 basis points in the fourth quarter, down from an average net production loss of 20 bps in the third quarter and down from a gain of 38 basis points one year ago. The average quarterly pre-tax production profit, from the third quarter of 2008 to the most recent quarter, is 50 basis points.
  • Average production volume fell to $436 million per company in the fourth quarter, down from $578 million per company in the third quarter. Volume by count per company averaged 1,395 loans in the fourth quarter, down from 1,819 loans in the third quarter.
  • Total production revenue (fee income, net secondary marketing income and warehouse spread) decreased to 317 bps in the fourth quarter, down from 326 bps in the third quarter. On a per-loan basis, production revenues decreased to $9,637 per loan in the fourth quarter, down from $10,392 per loan in the third quarter.
  • Purchase share of total originations, by dollar volume, increased to a study high of 88 percent in the fourth quarter from 86 percent in the third quarter. For the mortgage industry as a whole, MBA estimates purchase share at 83 percent in the fourth quarter.
  • Average loan balance for first mortgages decreased to $322,225 in the fourth quarter, down from $335,940 in the third quarter.
  • Total loan production expenses – commissions, compensation, occupancy, equipment and other production expenses and corporate allocations – increased to a study-high of $12,450 per loan in the fourth quarter, up from $11,016 per loan in the third quarter. From third quarter 2008 to last quarter, loan production expenses averaged $7,068 per loan.
  • Average number of production employees per company declined from 443 in the third quarter to 390 in the fourth quarter (on a repeater company basis).
  • Servicing net financial income for the fourth quarter (without annualizing) fell to $37 per loan, down from $102 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, rose to$104 per loan in the fourth quarter, up from $95 per loan in the third quarter.
  • Including all business lines (both production and servicing), 25 percent of the firms in the study posted pre-tax net financial profits in the fourth quarter, down from 46 percent in the third quarter.

The MBA 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. The 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 310 companies that reported production data for the fourth quarter were independent mortgage companies; the remaining 18 percent were subsidiaries and other non-depository institutions. 

MBA publishes five Mortgage Bankers Performance Report publications per year: four quarterly reports and one annual report. To purchase or subscribe to the publications, call (202) 557-2879. The reports can also be purchased on MBA’s website by visiting