The Mortgage Bankers Association (MBA) released data on Wednesday showing that mortgage bankers experienced a significant decline in per-loan profits in the fourth quarter of 2025, with net production profits averaging 17 basis points. This represents a 44% drop from the previous quarter’s 33 basis points, despite improvements in overall profitability across the sector.

Profitability Improves, But Per-Loan Earnings Fall

Marina Walsh, the MBA’s vice president of industry analysis, stated in a press release that the average net production profit for the fourth quarter of 2025 was 17 basis points, an improvement from the 4 basis points in losses recorded in the same period in 2024. However, the drop from the prior quarter’s 33 basis points highlights a significant decline in per-loan profitability.

Walsh noted that while production volume increased between the third and fourth quarters of 2025, revenues declined, and the cost to originate loans remained relatively flat. This was partly attributed to loan locks recorded in September that were accounted for in Q3 earnings rather than Q4, in line with accounting standards.

According to the MBA’s report, 68% of mortgage companies in its sample reported overall profits in Q4 2025, a 61% increase from the previous year. However, the average pretax production profit for the quarter was down from 33 basis points in Q3 to 17 basis points, reflecting a marked decline in profitability on a per-loan basis.

Service and Originating Costs Impact Profits

The MBA attributed the decline in profits to increased markdowns and amortization from payoffs across mortgage servicing rights (MSR) portfolios from October through December. These adjustments reduced earnings across both origination and servicing business lines, according to the report.

Data from 338 nonbank mortgage companies was used to compile the quarterly Mortgage Bankers Performance Report. Eighty-one percent of the companies that reported production data for Q4 2025 were IMBs (Independent Mortgage Bankers), while the remaining 19% were mortgage subsidiaries or other nondepository institutions.

Total production revenue, which includes fee income, net secondary marketing income, and warehouse spreads, fell to 340 basis points in Q4, down 19 basis points from Q3. On a per-loan basis, production revenue declined from $12,310 in Q3 to $11,776 in Q4.

Meanwhile, total production expenses dropped slightly to 323 basis points in Q4, down from 326 basis points in Q3. On a per-loan basis, expenses fell from $11,109 to $11,102. This remains significantly higher than the historic average of $7,846 per loan since Q1 2008.

Loan Volumes Rise, But Profitability Lags

Despite the decline in per-loan profits, the average company produced $643 million in mortgage originations in Q4 2025, up from $634 million in Q3. The average loan count also increased during the quarter, from 1,866 to 1,973 per company.

Purchase loans accounted for 71% of all first-lien mortgage originations by dollar volume for nonbanks from October through December. The MBA estimated that the purchase share across the entire mortgage industry was 58% during the same period.

The average loan balance for first mortgages rose from $373,414 in Q3 to $379,587 in Q4. Including junior-lien loans such as home equity lines of credit (HELOCs), the average balance increased from $355,145 to $362,912.

In the servicing channel, net financial income per loan in Q4 (without annualization) was $13, down from $29 per loan in the prior quarter. Servicing operating income also dropped from $92 to $90 per loan during the quarter, excluding factors like MSR amortization and gains or losses from bulk sales of MSRs.

The decline in per-loan profits for IMBs in Q4 2025 raises concerns about the sustainability of current business models in the mortgage industry. With costs remaining high and revenue per loan falling, companies may need to reevaluate their strategies to maintain profitability in the coming quarters.

As the housing market continues to evolve, the performance of mortgage companies will be closely watched, particularly with regard to how they adapt to changing economic conditions and regulatory environments. The MBA’s report provides a critical snapshot of the industry’s health and may influence future policy and investment decisions.