Mortgage bankers saw a pre-tax net production profit of $950 on each loan they originated in the second quarter, a big improvement compared with a net loss of $28 per loan in the first quarter, according to the Mortgage Bankers Association’s (MBA) Quarterly Mortgage Bankers Performance Report.
Of the lenders reporting data to the MBA, average production volume was $636 million per company – up from $488 million per company in the first quarter.
Helping to boost profits was an increase in activity: Volume by count per company for the quarter averaged 1,862 loans, up from 1,448 loans in the first quarter.
It also cost less to originate: Total loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – decreased to 321 basis points in the second quarter, down from 381 basis points in the first quarter, as per the report.
Per-loan costs decreased to $10,965 per loan, down from $12,579 per loan in the first quarter.
“IMB net production income reached its highest level since the fourth quarter of 2021,” says Marina Walsh, vice president of industry analysis for the MBA, in the report. “The seasonal pickup in purchase volume, and the average number of production employees decreasing from last quarter, led to production costs dropping by more than $1,600 per loan. At the same time, average loan balances reached a study-high, resulting in an increase in gross production revenue.”
Servicing net financial income for the second quarter (without annualizing) was $30 per loan, up from $22 per loan in the first quarter.
Servicing operating income, which excludes MSR amortization, gains/loss in the valuation of servicing rights net of hedging gains/losses, and gains/losses on the bulk sale of MSRs, remained unchanged at $90 per loan in the second quarter.
“Servicing net financial income improved slightly, as impairments on mortgage servicing rights were minimal,” Walsh adds. “Combining production and servicing operations, 80 percent of mortgage companies in the sample posted overall profits – the highest percentage since the third quarter of 2021.”
Photo: Pepi Stojanovski