Increasing loan balances, reduced head count and higher seasonal volume led nonbanks to report the highest loan production profits in years last quarter, according to the Mortgage Bankers Association.
The pre-tax net production profit of $950 per originated reversed a two-quarter slide into the red, with improvement surging from a
The latest positive number also increased by 37% from $693 in net income during the same quarter in 2024 and more than doubled last calendar year's
"IMB net production income reached its highest level since the fourth quarter of 2021," said Marina Walsh, CMB, MBA's vice president of industry analysis, in a press release.
Viewed on a basis point level, second quarter pre-tax production profit came in at a gain of 25 bps per loan, compared to a loss of 7 bps over the first quarter. On a historical basis, though, the latest profit is still running below the post-2008 average of 40 bps.
While current mortgage rate levels and a
The traditional spring buying season, accompanied by periodic drops in mortgage rates that led to
"The seasonal pickup in purchase volume and the average number of production employees decreasing from last quarter, led to production costs dropping by more than $1,600 per loan. At the same time, average loan balances reached a study-high, resulting in an increase in gross production revenue," Walsh continued.
Production revenue comprising fees, net secondary marketing income and warehouse spread rose to $12,551 per loan, up from $11,190 in the first quarter. Production employee headcount per company narrowed to an average of 315 in the second quarter, a drop from 322 employees in the first three months of 2025.
Meanwhile, the average loan balance for new first mortgages climbed 2.7% on a quarterly basis to $374,151 from $364,339. Taking into account all types of loans, including second mortgages and home equity liens, the average balance similarly increased 2.6% to $355,558, up from $346,714.
The second-quarter turnaround also came off an average of $636 million in volume per lender, increasing from $488 million three months prior and $492 million a year ago.
Production momentum buoyed the IMB segment, with four out of five companies reporting pre-tax second-quarter financial profit across their businesses after also factoring in servicing. The 80% majority increased from just 58% in the first quarter and nudged past 78% reported one year earlier.
How servicing helped fuel profits
While production numbers outshined
Operating income, excluding amortization of
How the largest lenders performed
MBA's numbers also largely corresponded to positive trends seen in a separate report that exclusively looked at mortgage performance of 18 of the largest banks and publicly traded IMBs published by Boston Consulting Group.
BCG found origination volumes up 35% on a quarterly basis and 24% higher year over year at the end of June. Among the nine companies reporting gain on sale numbers, five saw decreases with a median drop of 12 basis points compared to the previous quarter and 77 bps versus one year ago.
The report noted nonbanks continue to gain origination and servicing market share versus their depository peers, with a boost in home equity lending.
While growth trends remain on the upside, the companies "highlighted the rate dependent nature of the market anticipating slight origination growth under current rates while preparing for refinance opportunities once rates shift lower," BCG said.
