Skip to main content

Q2 Mortgage Production Profits at Three-Year High

Phil Hall
Aug 29, 2019
Photo credit: Getty Images/Gerasimov174

The second quarter was a healthy three-month stretch for the industry, according to the Mortgage Bankers Association’s (MBA) Quarterly Mortgage Bankers Performance Report.
 
During the second quarter, independent mortgage banks and mortgage subsidiaries of chartered banks enjoyed a net gain of $1,675 on each loan they originated, up from a reported gain of $285 per loan in the first quarter. The average pre-tax production profit was 64 basis points (bps) in the second quarter, up from an average net production profit of eight bps in the first quarter of this year.
 
Furthermore, the average loan balance for first mortgages reached a study high of $268,520 in the second quarter, up from $257,374 in the first quarter. The average production volume was $601 million per company in the second quarter, up from $385 million per company in the first quarter. And the volume by count per company averaged 2,312 loans in the second quarter, up from 1,571 loans last quarter.
 
“Production profits in the second quarter of 2019 were the best MBA has seen since the third quarter of 2016 ($1,773 per loan), as production volume rose and expenses declined significantly,” said Marina Walsh, MBA’s vice president of industry analysis. “In fact, the drop in production expenses, by over $1,500 per loan, was the largest quarterly decline reported since the inception of this study in 2008.”
 
Still, there were a few challenges in the second quarter. Total production revenue decreased to 370 bps, down from 393 bps in the first quarter. On a per-loan basis, production revenues decreased to $9,400 per loan in the second quarter, down from a study high of $9,584 per loan in the first quarter. Net secondary marketing income decreased to 287 bps in the second quarter, down from 308 bps in the first quarter. On a per-loan basis, net secondary marketing income decreased to $7,411 per loan in the second quarter from $7,591 per loan in the first quarter.
 
“With anticipated increases in prepayment activity, we saw hits to servicing profitability resulting from mortgage servicing right markdowns and amortization,” added Walsh. “Nonetheless, the profitability on the production side of the business generally outweighed servicing losses."

 
Published
Aug 29, 2019
DOJ: Lakeland Bank To Spend $13M To Settle 'Redlining' Claims

Agreement with N.J. bank is the third-largest redlining settlement in Justice Department history.

Industry News
Sep 29, 2022
Angel Oak Layoffs Add To Growing List Of Non-QM Cuts

About 20% of its staff, or 75 people, were affected.

Industry News
Sep 28, 2022
Redwood Trust Names New Chief Investment Officer

Also announces planned CoreVest leadership transition to be completed on 3rd anniversary of acquisition

Industry News
Sep 27, 2022
Fannie Mae Pilot Program Seeks To Help Improve Renters' Credit

Renters, including historically underserved groups, will benefit from paying on time each month.

Industry News
Sep 27, 2022
Suffolk County Data Breach Puts Contracts On Back Burner

Cyberattack beginning Sept. 8 prevents title services from closing loans.

Tech
Sep 27, 2022
Nations Lending Opens Another Branch In Arizona

New Scottsdale branch welcomes Arizona native Christine McConnell as lead personal mortgage advisor.

Industry News
Sep 26, 2022