Independent Mortgage Banks Showing Renewed Profitability

The Mortgage Bankers Association (MBA) has found that independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a pre-tax net production profit of $1,201 on each loan they originated in Q3 of 2025, compared to a net production profit of $950 per loan in Q2 of 2025.

“After a series of volatile quarters since 2021, mortgage companies delivered healthier results in the third quarter,” said Marina Walsh, CMB, MBA’s vice president of industry analysis. “Combining both production and servicing operations, roughly 85% of the more than 325 mortgage companies in our sample posted overall profits.”

Key Q3 Takeaways

The MBA’s Quarterly Mortgage Bankers Performance Report measures revenue and cost breakouts, productivity, product mixes for originations and servicing volume, and pull-through rates.

“While third-quarter closed loan volume was relatively flat, and per-loan production expenses rose slightly compared to the second quarter, the increase in recorded production revenue drove profits higher in the third quarter,” added Walsh.

Walsh further explained that there was a surge in loan applications that locked in September and were recognized in earnings for the quarter. After factoring in fall-out, most of these locks will be reflected as closed loan volume in the fourth quarter, along with mark-to-market revenue adjustments.

Additional Q3 findings included:

• The average pre-tax production profit was 33 basis points (bps) in Q3 of 2025, compared to profit of 25 bps in Q2 of 2025. The average quarterly pre-tax production profit, from Q1 of 2008 to the most recent quarter, is 40 basis points.
• The average production volume was $634 million per company in Q3, down slightly from $636 million per company in Q2. The volume by count per company averaged 1,866 loans in Q3, up from 1,862 loans in Q2.
• Total production revenue (fee income, net secondary marketing income, and warehouse spread) increased to 359 bps in Q3, up from 346 bps in Q2. On a per-loan basis, production revenues increased to $12,310 per loan in Q3, up from $11,914 per loan in Q2.
• Total loan production expenses — commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations — increased to 326 basis points in Q3 of 2025 from 321 basis points in Q2 of 2025. Per-loan costs increased to $11,109 per loan in Q3, up from $10,965 per loan in Q2 of 2025. From Q1 of 2008 to last quarter, loan production expenses have averaged $7,799 per loan.
• The purchase share of first mortgage originations, by dollar volume, was 82%. For the mortgage industry as a whole, MBA estimates the purchase share was at 67% in Q3 of 2025.
• The average loan balance for first mortgages decreased to $373,414 in Q3, down from $374,151 in Q2. The average loan balance for total mortgages (firsts, seconds, HELOCs, other) decreased to $355,145 in Q3, down from $355,558 in Q2.
• Servicing net financial income for Q3 (without annualizing) was $29 per loan serviced, about flat compared to the $30 per loan serviced in Q2. Servicing operating income, which excludes MSR amortization, gains/loss in the valuation of servicing rights net of hedging gains/losses, and gains/losses on the bulk sale of MSRs, was $92 per loan serviced in Q3, slightly up from $90 per loan serviced in Q2.Including all business lines (both production and servicing), 85% of the firms in the MBA’s Quarterly Mortgage Bankers Performance Report posted pre-tax net financial profits in Q3 of 2025, up from 80% in Q2 of 2025.