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Report: Some Banks Are Losing Money on Mortgages


Apr 11, 2023
Report: Some Banks Are Losing Money on Mortgages

Over the past year, mortgage rates have steadily increased as part of the Fed’s efforts to tame inflation. Now, as more prospective buyers refrain from the market, mortgage companies are experiencing a loss.

For the first time ever, certain banks lost money on each mortgage financed in 2022, the Mortgage Bankers Association (MBA) found.

The report found that independent mortgage banks and mortgage subsidiaries lost an average of $301 for every mortgage financed in 2022.

“For the first time since the inception of MBA’s report in 2008, net production income was in the red in 2022, with losses averaging 13 basis points,” said Marina Walsh, MBA’s vice president of industry analysis, in the report. “The rapid rise in mortgage rates over a relatively short period of time, combined with extremely low housing inventory and affordability challenges, meant that both purchase and refinance volume plummeted.”

Related: In the ’80s, Mortgage Rates Were Almost Three Times As High — But It’s Still Harder To Buy a Home Now

Additionally, the number of mortgages issued dropped dramatically from the year prior. Mortgage companies financed about $2.6 billion worth of mortgages per company in 2022, marking a steep decline from $4.9 billion in 2021.

“There is no denying the very difficult circumstances in which mortgage companies are still operating today,” Walsh concluded.

The report also noted that it predicts mortgage volume to further decline in 2023 before eventually rebounding in 2024 and 2025.

Related: Housing Is Less Affordable Now Than at the Peak of the 2008 Housing Bubble

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