Independent Mortgage Banker ‘Profits Decline In First Quarter

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Independent mortgage bankers’ profits have declined since the last quarter of 2020, but the latest data nonetheless shows a record first quarter.

Newly released Mortgage Bankers Association (MBA) rating Quarterly report on the activities of mortgage banks The first quarter of this year has seen a decline in the profits of independent mortgage banks (IMBs) as well as mortgage subsidiaries of registered banks – these entities reported a net profit of $ 3,361 on each loan issued in the first quarter of 2021, according to the data. This is less than the reported profit of $ 3,738 per loan in Q4 2020.

“Despite a slight decline from the fourth quarter of 2020, net operating income reached the highest level in any first quarter since the MBA report was published in 2008,” said Marina Walsh, CMB, MBA vice president of industry analysis. “For the fourth consecutive quarter, there has been a three-digit baseline profitability — another record that surpasses the 2012 boom of the Home Affordable Refinance Program (HARP).”

Walsh added: “Average production also declined from the previous quarter, but was still at its highest level in any first quarter as average loan balances continued to rise. Manufacturing revenue fell again from a peak in the third quarter of 2020, and while manufacturing costs rose slightly, the growth rate has slowed down from the previous two quarters. ”

Walsh said there was a more significant improvement in the net financial profit from servicing thanks to the recovery in the value of mortgage servicing rights (MSR). 97% of companies, combining manufacturing and service operations, showed overall profitability in the first quarter of 2021.

For the purposes of this report, 83% of the 366 companies that provided production data for the first quarter of 2021 were independent mortgage companies, and the remaining 17% were subsidiaries and other non-depository organizations.

Below are a few takeaways from the report, the full text of which can be found at: MBA.org:

  • Average profit from mining before tax was 124 basis points (basis points) in the first quarter of 2021, compared with an average net operating income of 137 basis points in the fourth quarter of 2020, but higher year on year from 61 basis points in the first quarter of 2020 of the year. The average quarterly operating profit before tax from the third quarter of 2008 to the most recent quarter is 55 basis points.
  • Average production was $ 1.44 billion per company in the first quarter, up from $ 1.47 billion per company in the fourth quarter. Volume per company averaged 4,879 loans in the first quarter compared to 5,049 loans in the fourth quarter of last year.
  • On a loan basis, proceeds from manufacturing declined to $ 11,325 per loan in the first quarter from $ 11,676 per loan in the fourth quarter.
  • The share of purchases in the total volume of works in dollar terms decreased to 39 percent in the first quarter from 43 percent in the fourth quarter. For the mortgage industry, the MBA estimates that the share of purchases was 29% in the first quarter of this year.
  • The average balance on the first mortgage rose to a new research high of $ 288,551 in the first quarter, up from $ 287,131 in the fourth quarter.
  • The average percentage rate of return (closing loans before filing) was 76% in the first quarter, up from 78% in the fourth quarter.
  • Total loan origination costs — commissions, compensation, placement, equipment and other operating expenses and corporate commitments — increased to $ 7,964 per loan in the first quarter from $ 7,938 per loan in the fourth quarter. From the third quarter of 2008 to the last quarter, loan origination costs averaged $ 6,621 per loan.
  • Productivity dropped to 3.6 credits per production worker per month in the first quarter from 4.2 credits per production worker per month in the fourth quarter of last year. Production employees include sales, execution and production support functions.
  • Net financial income from servicing in the first quarter (excluding annuals) was $ 154 per loan, compared with $ 5 per loan in the fourth quarter. Operating income from servicing, which does not include MSR amortization, service entitlement gains / losses net of hedging gains / losses and MSR wholesale gains / losses, was $ 65 per loan in the first quarter compared to $ 50 for a loan in the first quarter. fourth quarter.
  • Including all business lines (both manufacturing and services), 97% of firms included in the study showed net income before taxes in the first quarter, up from 95% in the fourth quarter.



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