IMBs earn $443 per loan in 2024 comeback

After two years of net production losses, independent mortgage bankers ended 2024 in the black on their originations; however, for smaller lenders, it was a different story, the Mortgage Bankers Association said.

In another piece of good news, net servicing income also increased year-over-year. It is only the third time since 2018 both sides of the business made money in the same year.

"Production revenues improved, and per-loan costs decreased as volume picked up, particularly in the second half of the year," said Marina Walsh, vice president of industry analysis in a press release.

IMBs and bank mortgage subsidiaries made an average of $443 per loan produced during 2024, up from a loss of $1,056 during 2023.

The annual profits came in a mixed-bag year for IMBs, as they lost money on production as a group during the first and fourth quarters.

Origination profitability was not universal, Walsh added.

"For example, for the sub-group of lenders with an annual production volume of less than $500 million in 2024, average net production losses continued for the third consecutive year," she said. "It has been difficult to spread the fixed costs of originating loans over lower volume."

How mortgage originators performed in 2024

Originators made an average 10 basis points on every loan, versus a loss of 37 basis points in 2023. That was still below the historic average (since 2008) of 47 basis points of profit.

Production revenues were $11,520 per loan in 2024, up from $10,202 in 2023, while expenses decreased to $11,076 compared with $11,258 over the same time frame.

Mortgage bankers lost $645 per loan originated in the first quarter, before turning profits of $693 and $701 in the subsequent two periods. But in the fourth quarter, industry participants dropped back to an average loss of $40 per loan, according to the quarterly data releases from the organization.

How mortgage servicers performed in 2024

On the servicing side, net financial income, which includes net servicing operational income, mortgage servicing right amortization plus gains and losses on MSR valuations, was $301 per loan last year, up from $263 for 2023.

Across the IMBs in the study, 68% reported pretax net financial profits in 2024, taking into account all of the business lines. This is almost double the 36% in 2023 and above the 53% in 2022.

But without the money made on servicing, only 56% of IMBs would have been profitable last year, the MBA said.