Report: Mortgages Lost US Banks In Historic Housing Shock

A new study from the Mortgage Banker’s Association (MBA) says that for the first time ever, US banks are losing money on mortgages.

The 2022 report shows a sharp decline in revenue for financial institutions that lend money to corporations, investors, and consumers for real estate.

“Independent mortgage banks and mortgage subsidiaries of chartered banks lost an average of $301 on each loan they originated in 2022, down from an average profit of $2,339 per loan in 2021.”

This is the first time that all mortgage lenders have lost money since the MBA started keeping track of these numbers in 2008.

The study says that the losses were caused by mortgage rates going up quickly and “extremely low housing inventory and affordability challenges.”

In 2022, mortgage lenders paid $10,624 per loan compared to $8,664 in 2021. This is because of costs like commissions, salaries, rent, tools, and other production costs.

MBA’s vice president of industry research, Marina Walsh, says the company expects the number of buyers who want to get a mortgage to keep going down through 2023.

“There is no denying the very difficult circumstances in which mortgage companies are still operating today. MBA’s forecast calls for mortgage volume to decline again in 2023 before an expected rebound in 2024 and 2025.”

Home prices could drop 19.5% this year to match rent, according to the Federal Reserve Bank of Dallas.

Dallas Fed officials said the housing “bubble hypothesis” deserves attention due to the potential of falling home prices.