What Banks REALLY Make on Your Mortgage

How do banks make money on your mortgage? A $300,000 loan lands in Emma's account with one keystroke, yet America's banks keep only about $1.20 of profit a year for every $100 they hold. And they still made $296 billion in 2025. How can both be true? In this animated explainer we follow one home loan from the first keystroke to the last cent: • where the money for a loan really comes from (no vault, no savers' cash) • why banks still can't create money without limit • the gap: what banks earn on loans and what they pay savers • where every $100 a bank holds goes in a year, and the $1.20 left over • who really collects Emma's mortgage interest: Fannie Mae, Freddie Mac, investors and the servicer • what happens when trust breaks: the 2023 Silicon Valley Bank run Chapters 0:00 A $300,000 Keystroke 0:38 Money From a Keystroke 1:57 Why Banks Can't Print Forever 2:59 The Gap 4:44 Follow the Hundred Dollars 5:38 The Small Slice, the Big Machine 6:39 Who Really Gets Emma's Interest 7:45 When the Machine Breaks 9:16 The Verdict Emma is a hypothetical borrower. Bank figures are 2025 totals and averages for all FDIC-insured US banks; mortgage figures use Freddie Mac's 30-year fixed rate of 7.40% (8 Oct 2026), principal and interest only. Sources FDIC Quarterly Banking Profile (full year 2025; Q2 2026): https://www.fdic.gov/quarterly-bankin... Bank of England, "Money creation in the modern economy", Quarterly Bulletin 2014 Q1: https://www.bankofengland.co.uk/-/med... Freddie Mac Primary Mortgage Market Survey (30-year fixed, 8 Oct 2026): https://www.freddiemac.com/pmms FDIC national deposit rates: https://www.fdic.gov/national-rates-a... Federal Reserve G.19 Consumer Credit (credit card interest rates): https://www.federalreserve.gov/releas... Federal Reserve Z.1 Financial Accounts of the United States (home mortgages, Q2 2026): https://www.federalreserve.gov/releas... FHFA, Fannie Mae and Freddie Mac single-family guarantee fees in 2024: https://www.fhfa.gov/document/d/sfgf/... Fannie Mae Servicing Guide F-2-08, servicing fees: https://servicing-guide.fanniemae.com... Mortgage Bankers Association, independent mortgage bank production profits, 2025 JPMorgan Chase, 2025 annual report and Q2 2026 results: https://www.jpmorganchase.com/ir Federal Reserve, Review of the Supervision and Regulation of Silicon Valley Bank (28 Apr 2023): https://www.federalreserve.gov/public... Federal Reserve OIG, Material Loss Review of Silicon Valley Bank (Sep 2023): https://oig.federalreserve.gov/report... California DFPI order closing Silicon Valley Bank (10 Mar 2023): https://dfpi.ca.gov/wp-content/upload... Joint statement by Treasury, the Federal Reserve and the FDIC (12 Mar 2023): https://www.federalreserve.gov/newsev... NatWest Group heritage: the goldsmiths' ledger, 1671-72: https://www.natwestgroup.com/heritage... George Selgin, "Those dishonest goldsmiths", Financial History Review (2012): https://www.cambridge.org/core/journa... Educational content, not financial or investment advice. For decisions about your own money, talk to a licensed professional. #Banks #Mortgage #PersonalFinance