Apr. 1, 2015--Sorohan, Mike email@example.com
Independent mortgage banks and mortgage subsidiaries of chartered banks reported a net gain of $744 on each loan they originated in the fourth quarter, down from $897 per loan in the third quarter, the Mortgage Bankers Association reported.
The MBA Quarterly Mortgage Bankers Performance Report noted, however, that on a year-over-year basis, production profits rose. MBA Vice President of Industry Analysis Marina Walsh said fourth quarter profits per loan ($744) compared to $150 per loan (9 basis points) from a year gao. In addition, 74 percent of participating companies had overall positive pre-tax profits in the fourth quarter compared to 58 percent a year ago.
Other key findings of the report:
• Average production volume totaled $417 million per company in the fourth quarter, down from $437 million per company in the third quarter, but up from $367 million per company a year ago. Volume by count per company averaged 1,769 loans in the fourth quarter, down from 1,901 loans in the third quarter but up from 1,641 loans a year ago.
• Average production profit was 32 basis points in the fourth quarter, compared to an average net production profit of 42 bps in the third quarter and an average of 9 bps in a year ago.
• The purchase share of total originations, by dollar volume, fell to 65 percent in the fourth quarter, compared to 72 percent in the third quarter. For the mortgage industry as a whole, MBA estimates the purchase share at 54 percent in the fourth quarter.
• The jumbo share of total first mortgage originations was 8.44 percent in the fourth quarter compared to 9.42 percent in the third quarter.
• The average loan balance for first mortgages grew to a study high of $233,655 in the fourth quarter, from $231,914 in the third quarter.
• Secondary marketing income rose to 266 basis points in the fourth quarter, compared to 261 basis points in the third quarter.
• Total loan production expenses--commissions, compensation, occupancy, equipment and other production expenses and corporate allocations--increased to $7,000 per loan in the fourth quarter, from $6,769 in the third quarter.
• Personnel expenses averaged $4,428 per loan in the fourth quarter, up slightly from $4,401 per loan in the third quarter.
• The "net cost to originate" was $5,238 per loan in the fourth quarter, from $5,038 in the third quarter. The net cost to originate includes all production operating expenses and commissions, minus all fee income, but excluding secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread.
• Productivity was unchanged at 2.4 loans originated per production employee per month in the fourth quarter.
• Including all business lines, 74 percent of firms in the study posted pre-tax net financial profits in the fourth quarter, down from 83 percent in the third quarter but up from the 58 percent seen a year ago.
The MBA Mortgage Bankers Performance Report series offers a variety of performance measures on the mortgage banking industry and is intended as a financial and operational benchmark for independent mortgage companies, bank subsidiaries and other non-depository institutions. Seventy-three percent of the 338 companies that reported production data for the fourth quarter were independent mortgage companies; the remaining 27 percent were subsidiaries and other non-depository institutions.
MBA produces five performance report publications per year: four quarterly reports and one annual report. To purchase or subscribe to the publications, call (202) 557-2879. The reports can also be purchased on MBA's website by visiting www.mba.org/PerformanceReport.