Mortgage bankers saw a pre-tax net production profit of $1,201 on each loan they originated in the third quarter, up from $950 per loan in the second quarter, according to the Mortgage Bankers Association’s (MBA) Quarterly Mortgage Bankers Performance Report.
Average production volume was $634 million per company in the third quarter, down slightly from $636 million per company in the second quarter.
Volume by count per company averaged 1,866 loans in the third quarter, up from 1,862 loans in the second quarter.
Total production revenue (fee income, net secondary marketing income, and warehouse spread) increased to 359 bps in the third quarter, up from 346 bps in the second quarter.
On a per-loan basis, production revenues increased to $12,310 per loan, up from $11,914 per loan in the second quarter.
“After a series of volatile quarters since 2021, mortgage companies delivered healthier results in the third quarter,” says Marina Walsh, CMB, vice president of industry analysis for the MBA, in the report. “Combining both production and servicing operations, roughly 85 percent of the more than 325 mortgage companies in our sample posted overall profits.”
“While third-quarter closed loan volume was relatively flat, and per-loan production expenses rose slightly compared to the second quarter, the increase in recorded production revenue drove profits higher in the third quarter,” Walsh adds.
Walsh further explains that there was a surge in loan applications that locked in September and were recognized in earnings for the quarter. After factoring in fall-out, most of these locks will be reflected as closed loan volume in the fourth quarter, along with mark-to-market revenue adjustments.
Total loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – increased to 326 basis points in the third quarter, up from 321 basis points in the second quarter.
Photo: Pepi Stojanovski