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The Mortgage Bankers Association reported that independent mortgage bankers and mortgage subsidiaries of chartered banks saw a net gain of $5,535 on each loan they originated for the third quarter of 2020. This is a more than $1,000 gain per loan from the second quarter of 2020, according to the MBA's Quarterly Mortgage Bankers Performance Report.
"With the surge in mortgage production volume in the third quarter, net production profits among independent mortgage bankers increased, surpassing 200 basis points for the first time since the inception of MBA's report in 2008," said Marina Walsh, CMB, MBA's vice president of Industry Analysis. "Soaring production revenues - led by strong secondary marketing gains - drove these results and more than offset an increase in production expenses."
"Production expenses usually drop with increased volume, as fixed costs are spread over more loans. But in the third quarter, costs rose despite the volume increase. One major reason for this increase was escalating personnel costs, including signing bonuses, incentives, overtime, and commissions that were pushed higher with the need and competition for workforce talent," added Walsh.
Additionally, the MBA's report revealed that 99% of firms posted overall profitability for the third quarter. According to the report, the average pre-tax production profit was 203 basis points (bps) in the third quarter, up from an average net production profit of 167 bps in the second quarter of 2020.
The MBA reported that the average production volume was $1.34 billion per company in the third quarter, up from $1.02 billion per company in the second quarter. The volume by count per company averaged 4,732 loans in the third quarter, up from 3,631 loans last quarter.
Click here to read more from the MBA's Quarterly Mortgage Bankers Performance Report.