First quarter 2021 mortgage earnings were ‘slightly less impressive’



Home lender profit in the first quarter fell from their recent peak, but set a poll record between January and March, the Mortgage Bankers Association said Thursday.

Lenders received a net income of $ 3,361 or 124 basis points from the general balance sheet for each loan they made during the period. This is below $ 3,738 or 137 basis points in the previous fiscal period, but still historically very high.

In the history of MBA research back in 2008, mortgage lenders typically earned an average of 55 basis points of return on each loan; and only at one point until 2020, profitability rose to three-digit numbers. It was during the 2012 refinancing boom. At the time, profitability peaked at nearly 120 basis points.

In other words, the takeaway from the latest round of margins is that they are only “slightly less impressive” than in the previous quarter, said Marina Walsh, vice president of industry analysis for the Mortgage Bankers Association. Interview.

“Keep in mind that we are at 124 basis points, so we still have a way to go before we can even reach normal levels,” Walsh said.

Market indicators to date suggest that loan yields may continue to decline slowly while remaining historically high.

The MBA predicts total production will decline slightly in the second quarter to $ 1.05 trillion from $ 1.09 trillion in the previous fiscal period. Average production for an individual company in the first quarter was $ 1.44 billion, or 4,879 loans, up from $ 1.47 billion, or 5,049 units in the previous quarter.

The share of purchases fell to 39% in the first quarter from 43%, probably partly due to seasonal weakness in the housing market during the period. However, the procurement market usually strengthens in the second quarter and has been particularly hot lately due to high rates of household formation and lack of inventory

Purchase loans tend to cost more than refinancing, so when Q2 data comes out, production costs are likely to increase. Even during the first quarter, when purchasing was weaker, operating costs rose slightly to $ 7,964 per loan from $ 7,938 in the previous fiscal period.

These numbers show that in recent years there have been not only historically high profits, but also high costs. The average spending over the MBA study period is $ 6,621 per loan. The MBA includes commissions, compensation, occupancy, equipment, corporate allocations and other expenses in their calculations for this figure.

Staff still accounted for the lion’s share of expenses in the first quarter – $ 5,523 per loan, up from $ 5,426 in the previous financial period; and productivity declined over the period, dropping to 3.6 loans per employee per month from 4.2.

While lending performance was slightly weaker overall in the first quarter, the percentage of mortgage companies with pre-tax net income from their service and manufacturing operations combined increased from 95% to 97%. Financial net income from servicing rose to $ 154 per loan in the first quarter, up from $ 5 per loan in the previous fiscal period.

The MBA figures reflect the performance of independent mortgage banks and home loan subsidiaries of registered banks.


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