Mortgage Production Profits Reach Record Highs
Pandemics aside, it’s a good time to be a loan originator. Net gains per loans reach their highest levels since the Mortgage Bankers Association started tracking the profits back in 2008. All but 4% of companies reported earning a profit for the quarter.
Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a net gain of $4,548 on each loan they originated in the second quarter of 2020, up from a reported gain of $1,600 per loan in the first quarter of 2020, according to the Mortgage Bankers Association’s newly released Quarterly Mortgage Bankers Performance Report.
“Fueled by a surge in borrower demand and record-low mortgage rates, mortgage production profits in the second quarter reached the highest level since the inception of MBA’s report in 2008,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “Production volume averaged over $1 billion per company, and there was an ideal combination of higher revenues and lower costs. Revenues climbed by 57 basis points from the first quarter, while expenses improved by $844 per loan. Productivity also increased, reaching levels not seen since 2012.”
Added Walsh, “Servicing profitability did take a hit last quarter. Mortgage servicing right markdowns and amortization continued, and there was a loss of servicing income from elevated default activity. Despite these servicing losses, 96% of firms in the report posted overall profitability for the second quarter.”
Key findings of the quarterly report include:
Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a net gain of $4,548 on each loan they originated in the second quarter of 2020, up from a reported gain of $1,600 per loan in the first quarter of 2020, according to the Mortgage Bankers Association’s newly released Quarterly Mortgage Bankers Performance Report.
“Fueled by a surge in borrower demand and record-low mortgage rates, mortgage production profits in the second quarter reached the highest level since the inception of MBA’s report in 2008,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “Production volume averaged over $1 billion per company, and there was an ideal combination of higher revenues and lower costs. Revenues climbed by 57 basis points from the first quarter, while expenses improved by $844 per loan. Productivity also increased, reaching levels not seen since 2012.”
Added Walsh, “Servicing profitability did take a hit last quarter. Mortgage servicing right markdowns and amortization continued, and there was a loss of servicing income from elevated default activity. Despite these servicing losses, 96% of firms in the report posted overall profitability for the second quarter.”
Key findings of the quarterly report include:
MBA’s 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. Eighty-two percent of the 348 companies that reported production data for the second quarter of 2020 were independent mortgage companies, and the remaining 19 percent were subsidiaries and other non-depository institutions.
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