MBA: Mortgage Revenues Increased In 2016, But So Did The Cost To Originate

The average profit per mortgage originated increased to $1,346 in 2016 – up from $1,189 in 2015, according to the Mortgage Bankers Association’s Annual Mortgage Bankers Performance Report, which is based on data reported by independent mortgage bankers.

What’s more, the average loan balance reached a study-high $244,945 for first mortgages – up from $242,480 in 2015. It was the seventh consecutive year of rising loan balances on first mortgages.

This translated into higher revenues, which also reached a study-high of $8,555 per loan in 2016.

At the same time, production expenses reached a study-high of $7,209 per loan, offsetting the increase in revenue. Total loan production expenses – commissions, compensation, occupancy, equipment and other expenses and corporate allocations – increased to $7,209 per loan, up from $7,046 in 2015.

Personnel expenses averaged $4,801 per loan in 2016, up from $4,699 per loan in 2015.

All together, lenders originated 11,161 loans, or nearly $2.7 billion, per company in 2016, compared with 9,906 loans, or about $2.4 billion per company, in 2015.

For the mortgage industry as whole, the MBA estimates that production volume reached $1.89 trillion in 2016, up from $1.68 trillion in 2015.

The report also shows that mortgage lenders with servicing portfolios experienced significant fluctuations in the valuation of their mortgage servicing rights related to corresponding interest rate fluctuations during 2016.

“Most servicers reported net servicing financial losses in the first half of the year, followed by recoveries by the end of the year,” says Marina Walsh Walsh, vice president of industry analysis for the MBA, in a statement. “Including both production and servicing operations, 94 percent of the firms in the study posted overall pre-tax net financial profits in 2016, from 92 percent 2015.”

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