Average production volume was $455 million per company in the first quarter, down from $690 million per company in the fourth quarter of 2016. The volume by count per company averaged 1,944 loans in the first quarter, below the 2,811 loans from the previous quarter. The average pre-tax production profit was 10 basis points (bps) in the first quarter—it 24 bps in the fourth quarter.
But there were increases in the first quarter: Total loan production expenses hit a study-high of $8,887 per loan in the first quarter, considerably higher than the $7,562 in the fourth. Personnel expenses averaged $5,802 per loan in the first quarter, compared to $5,001 per loan in the fourth quarter. But productivity dropped to 1.7 loans originated per production employee per month in the first quarter, below the 2.7 level in the previous quarter.
“The drop in overall production volume in the first quarter of 2017 resulted in the highest per-loan production expenses reported since inception of our study in the third quarter of 2008,” said Marina Walsh, MBA’s vice president of industry analysis. “While higher production revenues mitigated a portion of the cost increase, production profitability nonetheless declined by more than half the previous quarter. For those mortgage bankers holding mortgage servicing rights (MSR), an increase in mortgage interest rates resulted in MSR valuation gains and helped overall profitability.”