US Banks Lost Money on Mortgages for the First Time in History: What's Behind the Housing Market Shift

New data obtained by the Mortgage Bankers Association has revealed that US banks have lost money for mortgages they financed for the first time in history. Moreover, US banks lost money on mortgages in 2025, according to a report from the Mortgage Bankers Association (MBA), which noted that the average loss was $301 on each loan.

Housing is so unaffordable banks lost money for each mortgage they financed in 2025, a report found. The Mortgage Bankers Association’s annual performance report highlights a significant downturn in profitability for mortgage lenders. Mortgage lenders lost hundreds of dollars on average for each loan they originated last year while soaring interest rates dampened demand, according to a new report.

The $301 Loss: A Historic Turning Point

Independent mortgage banks and mortgage subsidiaries of chartered banks lost an average of $301 on each loan they originated in 2025, down from an average profit of... This marks a stark departure from previous years and raises concerns about the sustainability of the current mortgage lending environment. Banks and mortgage lending firms lost an average of $301 on each home loan last year, according to the Mortgage Bankers Association’s annual performance report. Some providers averaged a $301 loss per loan, a first.

Factors Contributing to the Mortgage Loss

Several factors contributed to this unprecedented situation, including:

• Soaring Interest Rates: Increased borrowing costs significantly reduced demand for mortgages.
• High Housing Prices: Housing is so unaffordable...
• Reduced Refinancing Activity: With higher rates, fewer homeowners sought to refinance existing mortgages.

The average loss of $301 per loan underscores the challenges facing the mortgage industry. This historical event warrants close observation and analysis to understand its long-term consequences.