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Smaller Q4 Gains for Independent Mortgage Banks

Phil Hall
Mar 23, 2018
Today's first-time homebuyer is older and more likely to be single than first-time homebuyers in the 1970s and 1980s, according to a new Zillow analysis

Independent mortgage banks and mortgage subsidiaries of chartered banks reported a net gain of $237 on each loan they originated in the fourth quarter of 2017, a significant drop from the reported gain of $929 per loan in the third quarter, according to data from the Mortgage Bankers Association (MBA).
The average pre-tax production profit was nine basis points (bps) in the fourth quarter, a steep drop from an average net production profit of 40 bps in the third quarter. The purchase share of total originations, by dollar volume, was 71 percent in the fourth quarter, down from 74 percent in the third quarter. However, the average loan balance for first mortgages reached a study high of $254,291 in the fourth quarter, up from $251,109 in the third quarter.
“Production profits plummeted in the fourth quarter of 2017 compared to the third quarter of 2017,” said MBA’s Vice President of Industry Analysis Marina Walsh. “Purchase volume was lower in the fourth quarter, in part due to normal seasonality. At the same time, there was no substantial pickup in refinancings. While cash-out refinancings grew incrementally to 16 percent of overall production volume in the fourth quarter, from 14 percent the previous quarter, rate-term refinancings continued to be less than 13 percent of overall production volume, on par with the previous two quarters.”

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