Articles
Why Retaining Servicing Remains Critical in 2025's Evolving Mortgage Market
Managing a profitable mortgage business remains challenging as lenders try to navigate a market that is unsettled. While the Mortgage Bankers Association forecasts a 28% increase in origination volume to $2.3 trillion this year, lenders still face headwinds from elevated borrowing costs and constrained affordability. Mortgage Servicing Rights (MSRs) remain valuable assets in this environment, providing steady income streams when origination volumes fluctuate.
Whether servicing loans held in portfolio, sold with servicing retained, or acquired through MSR purchases, mortgage servicers must leverage every available tool to expand borrower relationships and maintain their servicing portfolios. The combination of servicing retention and modern servicing software creates a competitive advantage beyond simple fee income.
The 2025 Mortgage Landscape: Opportunities Amid Challenges
The mortgage market has evolved significantly since the dramatic rate increases of 2022-2023. Current 30-year fixed mortgage rates hover around 6.6% as of August 2025, down from peaks above 7% but still well above the 2.65% average of 2021. While Fannie Mae projects rates could decline to approximately 6.3% by year-end, they remain elevated enough to substantially suppress refinancing activity.
This rate environment presents both challenges and opportunities for servicers. The reduced refinancing business means portfolio runoff from rate-driven refinancing is minimal. This is a stark contrast to the previous decade, when historically low rates drove frequent refinancing. However, the market has adapted with new product innovations that servicers must be prepared to handle.