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Last year was problematic for independent mortgage banks and the mortgage subsidiaries of chartered banks – according to new data from the Mortgage Bankers Association (MBA), this sector lost an average of $1,056 on each loan they originated in 2023, down from an average loss of $301 per loan in 2022. The 2023 data marked a series high in the 15-year history of the trade group’s Annual Mortgage Bankers Performance Report.

Average production volume was $1.9 billion (6,021 loans) per company in 2023, down from $2.6 billion (8,371 loans) per company in 2022. On a repeater company basis, average production volume was $2.0 billion (6,436 loans) in 2023, down from $2.7 billion (8,605 loans) in 2022.

In basis points, the average production loss was 37 basis points in 2023, worsening from a loss of 13 basis points in 2022. Since the inception of MBA’s Annual Performance Report in 2008, net production income by year has averaged 49 basis points ($1,117 per loan). Total production revenues (fee income, net secondary marking income and warehouse spread) were 329 basis points in 2023, down from 333 basis points in 2022. On a per-loan basis, production revenues were $10,202 per loan in 2023, down from $10,322 per loan in 2022.

The average loan balance for first mortgages reached a study high of $331,437 in 2023, up from $323,780 in 2022.

The refinancing share of total originations (by dollar volume) decreased to 11% in 2023 from 20% in 2022. For the entire mortgage industry, MBA estimated the refinancing share last year decreased to 19% from 57% in 2022.

“Mortgage lender financial results worsened in 2023 with the average net production loss moving to 37 basis points from losses of 13 basis points in 2022. And although production revenues stabilized, costs escalated to a study high $11,258 per loan,” said Marina Walsh, MBA’s vice president of industry analysis. “Mortgage market conditions were challenging last year because of higher mortgage rates, low housing inventory, and weaker housing affordability. These factors resulted in a further decline in volume, compounding the precipitous drop in 2022. Many companies were still chasing cost containment and personnel reduction throughout the year.”