Independent mortgage banks and mortgage subsidiaries of chartered banks on average showed a net loss of $82 for every loan originated in the second quarter of 2022. That’s a drop of over $300.
That number is a large reason why only 57% of companies were profitable in the Mortgage Bankers Association’s (MBA) newly released Quarterly Mortgage Bankers Performance Report. That’s down from 72% in the first quarter of 2021.
“The second quarter of 2022 did not yield the usual Spring seasonal pick-up in purchase activity, in an environment of higher mortgage rates, low housing inventory, and affordability challenges,” said Marina Walsh, CMB, MBA’s vice president of industry analysis. “With lower volume, lower revenues, and higher costs relative to the first quarter, the average pre-tax net production income per loan reached its lowest level since the fourth quarter of 2018.”
Among the top three findings of the report:
- The average pre-tax production loss was 5 bps in the second quarter of 2022, down from an average net production profit of 5 bps in the first quarter, and down from 73 basis points in the second quarter of 2021. The only other quarters in the survey's history to record net production losses were: first quarter of 2014 (8 basis points); first quarter of 2018 (8 basis points), and the fourth quarter of 2018 (11 basis points).The average quarterly pre-tax production profit, from the third quarter of 2008 to the most recent quarter, is 54 basis points.
- Average production volume was $705 million per company in the second quarter, down from $808 million per company in the first quarter. The volume by count per company averaged 2,139 loans in the second quarter, down from 2,587 loans in the first quarter.
- Total production revenue (fee income, net secondary marketing income and warehouse spread) decreased to 335 bps in the second quarter, down from 350 bps in the first quarter. On a per-loan basis, production revenues decreased to $10,855 per loan in the second quarter, down from $10,861 per loan in the first quarter.
MBA's Mortgage Bankers Performance Report series offers a variety of performance measures on the mortgage banking industry and is intended as a financial and operational benchmark for independent mortgage companies, bank subsidiaries and other non-depository institutions. Eighty-four percent of the 334 companies that reported production data for the second quarter of 2022 were independent mortgage companies, and the remaining 16 percent were subsidiaries and other non-depository institutions.