Independent mortgage banks and subsidiaries made an average profit of $1,263 on each loan they originated in the third quarter, up from $575 per loan in the second quarter, according to the Mortgage Bankers Association's (MBA) Third Quarter Mortgage Bankers Performance Report.
‘Higher volume helped profitability, as production costs were spread over a greater number of loans,’ says Marina Walsh, MBA's associate vice president of industry analysis. ‘Third-quarter production expenses dropped on a per-loan basis as volume rose, although expenses remained high by historical standards when compared to other quarters with similar volume. At the same time, secondary marketing income rose from $4,006 per loan in the second quarter of 2011 to $4,563 per loan in the third quarter of 2011. Secondary marketing gains improved as primary-secondary spreads widened in the third quarter.’
The MBA report found that the average production profit (net production income) was 66.37 basis points (bps) in the third quarter, compared to 32.86 bps in the second quarter. Also, the average production volume was $237 million per company (or 1,114 loans per company) in the third quarter, up from $174 million per company (or 866 loans per company) in the second quarter.