Per-loan origination costs climbed in the first quarter for typical independent mortgage banks (IMBs) but failed to offset a larger increase in per-loan production revenues, enabling the industry to post its fourth straight quarter of profitability.
Origination costs rose from $11,102 per loan in the fourth quarter to $11,898 in the first three months of 2026, a nearly $800 or roughly 7.2% increase, according to figures released Friday by the Mortgage Bankers Association (MBA).
Per-loan revenues increased $850 from the fourth quarter to land at $12,626. That also represents about a 7.2% quarterly increase.
Total loan production expenses — including but not limited to commissions, compensation, occupancy and corporate allocations — rose to 336 basis points in the first quarter from 323 in the fourth quarter, while total production revenue increased to 353 basis points from 340 during the fourth quarter.
IMBs and mortgage subsidiaries of chartered banks ultimately posted pretax net production profits of $727 per loan in the first quarter, a nearly 8% gain from $674 per loan in the fourth quarter.
Industry pretax production income of 16 basis points was roughly flat from 17 basis points in the fourth quarter, but down from 25 basis points a year ago.
Since the inception of the survey in 2008, the MBA says quarterly net production income has averaged 39 basis points. However, flat quarterly income totals occurred “despite a decline in production,” noted Marina Walsh, vice president of industry analysis at the MBA, in a statement accompanying the data.
By dollar volume, average production fell to $621 million in the first quarter from $643 million per company in the fourth quarter. That reflects a decline in quarterly loan counts to an average of 1,729 per company in the first quarter from 1,973 in the fourth quarter.
As mortgage rates declined to four-year lows in January and February before spiking in March following the start of the Iran war, the refinance share of originations surged to four-year highs, according to data recently published by ICE Mortgage Technology.
“Combining both production and servicing business lines, 75% of lenders were profitable in the first quarter,” said Walsh, which reflects an increase from 68% of firms being profitable in the previous quarter. “Still, disparities between the top and bottom performers remain wide,” she added.
Some of those disparities are born of mortgage companies’ varying access to additional revenue streams from servicing and hedging retained loan portfolios. Servicing net financial income jumped in the first quarter to $77 per loan serviced from $13 per loan in the previous quarter.
Gains in servicing operating income were narrower, however, rising to $93 per loan from $90 in the fourth quarter. Average mortgage rates on typical 30-year home loans that spiked from around 6% in February to near 6.5% by the end of March slowed markdowns on mortgage servicing right valuations, according to MBA data.
