Last week the Mortgage Bankers Association (MBA) released its Annual Mortgage Bankers Performance Report for 2023, showing 36% of reporting institutions posted positive net financial income, down from 53% in 2022.
Total loan volume decreased to $1.325 trillion in 2023 from $1.578 trillion in 2022. Of those firms reporting their figures to the MBA, the average production volume was $1.9 billion in 2023, down from $2.6 billion in 2022, and $4.8 billion in 2021. Pre-tax net financial income per reporting institution was a negative $2.3 million, down from an average gain of $382,000 in 2022 and $18 million in 2021.
With interest rates on 30-year fixed-rate conventional mortgages averaging 6.91% in 2023, up from 5.55% in 2022, and total residential origination volume decreasing 27% from 2022, the MBA’s study highlights just how difficult the market for mortgage originations was last year.
Mortgage banking production profits decreased to -37 basis points – a loss of $1,056 per loan originated in 2023 – from -13 bps, or a loss of $301 per loan originated in 2022. Profitability declined as the year wore on, the numbers show, with net production profits of -31 basis points in the first and second quarters, but -41 basis points in the third and fourth quarters.
Driving the decline in profitability, average per-loan total production expenses – commissions, compensation, occupancy and equipment, and other production expenses and corporate allocations – rose to $11,258 per loan in 2023, up from $10,624 per loan in 2022 and $8,664 in 2021. Production expenses decreased slightly from the first half of the year ($11,470 per loan) to the second half of the year ($11,145 per loan).
Reflecting the multi-decade-low in home sales last year, average loan origination count per reporting firm decreased to 6,021 loans in 2023, from 8,371 loans in 2022. The number of loans closed per production employee remained constant from 2022 to 2023 at 1.5 loans, but dropped from 2.5 loans in 2021.
Average loan balances in 2023 increased slightly to $319,045 from $318,205 in 2022 – a more than $50,000 increase in average loan balances from $261,032 in 2019. Purchase volume accounted for 81% of total annual originations and refinance volume, 19% (down from 30% of total originations in 2022).
The annual report, now in its 10th edition, is compiled from data derived from the quarterly Mortgage Bankers Financial Reporting Web Form (MBFRF), through a joint agreement with the MBA, Fannie Mae, Freddie Mac, and Ginnie Mae. Independent mortgage companies are required to submit quarterly MBFRF data to the agencies and have the option of releasing their data to the MBA for use in aggregate industry statistics.
The annual report for 2023 included 249 firms reporting their company analytics, 263 companies reporting residential production business, and 134 companies reporting residential loan servicing.
