Increases in year-over-year refinance and purchase loan volume contributed to higher overall commissions for loan originators (LOs) and loan processors in the first quarter, despite a slight decline in basis points (BPS) paid per loan, LBA Ware’s Q1 2021 Mortgage Loan Compensation Report shows.
Commissions earned by LOs increased 52% compared with the first quarter of 2020 because the average LO funded 55% more loan volume, according to the report, which is based on data shared from LBA Ware’s CompenSafe ICM platform.
LOs averaged $1.43 million in funded refinance volume per month, an increase of more than 87% compared with $764,000 in the first quarter of 2020. They received an average of 96.332 BPS per refinance loan versus 96.944 BPS a year ago.
Purchase volume grew 22% year-over-year, with LOs averaging $1.11 million in funded purchase loans per month versus $912,000. LOs received on average 109.091 BPS per purchase loan versus 108.251 in the first quarter of 2020.
Although LO paychecks were larger, compared with last year, the uptick in refinance production and slight downward pressure on BPS paid for refinance loans contributed to a 1.79% decrease in overall per-loan commissions – from 103.564 BPS to 101.709 BPS.
Loan processors handled 29% more loans per month in the first quarter compared with the first quarter of 2020, fueling a 51% increase in average incentive compensation earned from $1,451 per processor per month to $2,194.
Loan teams grew significantly over the past year, with the average lender increasing LO head count by 32% and processor head count by 58%, the report shows.
On average, 3.6 individuals were paid a form of loan compensation per loan unit versus 3.2 individuals in the first quarter of 2020.
“They say ‘many hands make light work,’ and in the first quarter of this year we definitely saw lenders sharing the workload,” says Lori Brewer, founder and CEO of LBA Ware, in a release. “Lenders employed 32 percent more originators and 58 percent more processors than this time last year and paid incentive compensation to an average of three to four individuals per loan. So far, volume remains brisk across purchase and refi, but as refi volume wanes it could prove difficult to sustain this level of staffing. This is a trend we will be monitoring closely in the coming months.”
Photo: Pepi Stojanovski