Even with the surprisingly strong fourth quarter for origination volume, net production profits at nonbank lenders were down about 44% from the period ended Sept. 30, 2025, the Mortgage Bankers Association found.
Still, the industry has been profitable three quarters in a row. It follows a run where IMBs averaged losses 10 out of 12 reporting periods, from the second quarter of 2022 through the first quarter of 2025, with the exceptions of the second and third quarters in 2024.
Independent mortgage banks and mortgage subsidiaries of chartered banks reported a pre-tax net production profit of $674 per loan originated during the fourth quarter, the MBA's Quarterly Mortgage Bankers Performance Report found. In the third quarter, they had
The industry average of 17 basis points per loan was down from 33 basis points three months prior but above the 4 basis point loss one year ago.
Why did profitability drop from the third quarter?
"Compared to the third quarter of 2025, production volume rose, production revenues dropped, and the cost to originate stayed relatively flat," explained Marina Walsh, the MBA's vice president of industry analysis, in a press release.
"Combining both production and servicing operations, 68% of mortgage companies in MBA's sample posted overall profits in the fourth quarter of 2025, a modest increase from 61% one year ago."
A contributing factor to the quarter-to-quarter drop off in origination earnings was an increase in loans locking in September, when in the first half of the month, the 30-year fixed fell 24 basis points in two weeks, according to Freddie Mac. Rates did climb back up 10 basis points by the end of September.
But by accounting rules, because those loans were locked in September, they were included in the third quarter results, not the following period's, Walsh explained.
From the start of the fourth quarter through the end of the year, the 30-year FRM dropped another 19 basis points, Freddie Mac reported. At one point in 2026, the 30-year did go under 6%, but
This helped average volume per company rise to $643 million from $634 million for the third quarter.
Production revenue was $11,775 per loan for the period ended Dec. 31, versus $12,310 in the third quarter and $11,190 for the last quarter of 2024.
How did servicing perform at IMBs?
Segment expenses of $11,102 were $7-per-loan less than the third quarter's $11,109. They were $11,230 for the fourth quarter of 2024
"A rise in mortgage servicing rights markdowns and amortization from payoffs also negatively impacted overall profits across production and servicing business lines in the final three months of 2025," said Walsh.
Servicing net financial income for the fourth quarter was $13-per-loan not annualized, down from $29 three months prior and $142 for the year-ago period.
Servicing operating income, which excludes MSR amortization, gains or losses in the valuation of servicing rights net of hedging, and any gains or losses on the bulk servicing rights sales, was $90 per loan, down from $92 in the third quarter, but up from $84 on a year-over-year basis.
