Lenders Lost Money
The lenders lost money. Last year with housing prices declining and interest rates rising, mortgage banks lost an average of $300 on every loan they originated. This compares to 2021 when lenders averaged a profit of over $2300 per loan origination. Loan volumes were down 50%, but the cost to process a loan increased by almost 25%. The reason is that the market changed so fast that the lenders were not able to lower their overhead fast enough. While it sounds harsh, the lenders simply ended up with too many people working given the number of loans they had to process. According to the Mortgage Bankers Association, productivity plummeted to just 1.5 loans per month for each production employee.