MBA: Independent Mortgage Lenders Saw Stronger Profits In Q2

Posted by Patrick Barnard on August 26, 2015 No Comments
Categories : Residential Mortgage

Independent mortgage lenders earned a net gain of about $1,522 on each loan they originated during the second quarter – up from about $1,447 in the first quarter, according to the Mortgage Bankers Association's (MBA) Quarterly Mortgage Bankers Performance Report.

Average production volume reached $657 million per company, up from $473 million in the first quarter, according to the report.

Independent lenders originated an average of 2,714 loans during the second quarter, up from 1,917 in the first quarter.

The average production profit was 67 basis points (bps), compared to 60 bps in the first quarter, the report says.

The purchase share of total originations, by dollar volume, was 62%, up from 51% in the first quarter.

‘Average company production volume was up in the second quarter, as purchase volume grew and mortgage pipelines from the first quarter's refinance boomlet closed,’ says Marina Walsh, vice president of industry analysis for the MBA, in a statement. ‘The production volume increase resulted in a nominal decrease in per-loan production expenses, which offset a decrease in secondary marketing income. However, by historical standards, production expenses remained elevated given that the average company production volume was at the highest level since inception of the study in 2008.’

For the mortgage industry as a whole, the MBA estimates that purchase share reached 57% – meaning the industry moved more firmly into a purchase market during the second quarter.

The jumbo share of originations was 9.07% compared to 8.74% in the first quarter, according to the report.

The average loan balance for first mortgages grew to a study high of $244,350, up from $242,791 in the first quarter.

Secondary marketing income was 294 basis points, down from 297 basis points in the first quarter.

Total loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – was $6,984 per loan, down from $7,195.

Personnel expenses averaged $4,632 per loan, down from $4,675.

The ‘net cost to originate’ – including all production operating expenses and commissions, minus all fee income and excluding secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread – was $5,372 per loan, down from $5,597 in the first quarter.

Independents increased productivity by an average of 2.8 loans originated per employee per month in the second quarter, up from 2.4 loans in the first quarter, according to the report.

Including all business lines, 92% of the firms in the study posted pre-tax net financial profits in the second quarter, up from 88% in the first quarter.

To get a copy of the full report, click here.

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