It continued to get less profitable to originate mortgage loans in the third quarter, with the average net gain falling to $929 per loan, down from an average of $1,122 per loan in the second quarter, according to the Mortgage Bankers Association’s (MBA) quarterly performance report.
Although average production volume increased to $569 million per company, up from $526 million in the second quarter, average production costs also increased, rising to $8,060 per loan – including commissions, compensation, occupancy, equipment and other production expenses and corporate allocations – up from $7,774 in the second quarter.
Personnel expenses also increased from an average of $5,279 per loan in the third quarter, up from $5,119 in the second quarter.
“Despite rising average production volume, production expenses grew to $8,060 per loan – the second highest level reported since the inception of our study in the third quarter of 2008,” says Marina Walsh, vice president of industry analysis for the MBA, in a statement. “Production revenues remained relatively flat, with a minimal uptick in per-loan production revenues resulting from higher loan balances.”
Walsh notes that, historically, average production profits in the third quarter have performed slightly below the second quarter. “But production profits were also down in relation to historical averages for the third quarter,” she says.
“For those mortgage bankers holding mortgage servicing rights, lower MSR valuation losses helped overall profitability,” Walsh adds.