The Great Mortgage Reversal: Banks Losing Money for the First Time Ever



A surprising twist has emerged in a housing market marked by historically high prices and dwindling inventory. For the first time ever, banks and other mortgage providers are losing money on each mortgage they finance.

According to a recent Mortgage Bankers Association (MBA) report, certain banks experienced an average loss of $301 per loan in 2022, a drastic reversal from the average profit of $2,339 per loan just a year prior.

The Tipping Point

The housing market reached a tipping point in 2022, with a confluence of factors conspiring to erode the profits of mortgage providers. As mortgage rates soared to near 20-year highs, prospective homebuyers became increasingly hesitant to enter the market.

Blink, and You’ll Miss the Profits

The dramatic decline in mortgage volume had far-reaching consequences for banks and mortgage companies. On average, these institutions financed a mere $2.6 billion in loans in 2022, starkly contrasting the $5 billion they financed in 2021.

The Big Rebound? What This Means for Housing Prices

As the housing market continues to grapple with the affordability crisis, experts are split on the prospects for a correction. Some predict a significant downturn, with one MBA board member suggesting that home prices could fall by 9% this year.

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