Q1 Mortgage Profit Broke 2008 Record



This was not a complete record-breaking, but mortgage bankers did set several similar quarters and other new highs as they kicked off the year with a different profitable quarter. First quarter of 2021 Mortgage Bank Performance Report from the Mortgage Bankers Association (MBA) shows a net profit of $ 3,361 on each loan issued by Independent Mortgage Banks (IMB) and mortgage subsidiaries of registered banks. That’s less than the reported profit of $ 3,738 per loan in the fourth quarter of last year. Combining manufacturing and service operations, 97 percent of firms posted overall profitability during the quarter, up from 95 percent in the fourth quarter.

“Despite a slight decline from the fourth quarter of 2020, net operating income reached its highest level in any first quarter since the MBA report was published in 2008,” said Marina Walsh, CMB, MBA vice president of industry analysis. “Three-digit baseline profitability was observed for the fourth consecutive quarter – another record that surpasses the boom of 2012 generated by the Affordable Housing Refinancing Program (HARP) “.

She added: “Average production also declined from the previous quarter. but still remained at the highest level in the first quarter, as the average loan balance continued to rise. Manufacturing revenues fell again from a peak in the third quarter of 2020, and while manufacturing costs rose slightly, the rate of growth is slower than in the previous two quarters. ”

Walsh also noted that there was a more significant improvement in net financial profit from servicing thanks to the restoration of the mortgage servicing rights (MSR) valuation.

Total manufacturing revenue (fee and commission income, net income from secondary labeling and warehouse spread) fell from 421 basis points (bps) in the fourth quarter to 408 basis points. On a loan basis, proceeds from manufacturing declined to $ 11,325 per loan from $ 11,676 in the previous quarter. Net secondary marketing income declined to 331 basis points from 346 basis points and decreased per loan to US $ 9,283 from US $ 9,655.

The total cost of making loans – commissions, compensation, accommodation, equipment and other operating expenses and corporate appropriations – increased to $ 7,964 for the loan from $ 7,938. From the third quarter of 2008 to the first quarter of this year, loan origination costs averaged $ 6,621 per loan. … Staff costs rose from an average of $ 5,426 per loan in the fourth quarter to $ 5,523.

The average profit from mining before tax was 124 basis points, down from the 137 basis points average in the previous quarter. but more than doubled from 61 bp. a year earlier. The average quarterly profit from production before tax from the third quarter of 2008 to the most recent quarter was 55 basis points.

Average production was $ 1.44 billion per company, up from $ 1.47 billion in the prior quarter. The average volume was estimated at 4,879 loans against 5,049 loans in the 4th quarter.

IN share of purchases in the total number of worksin dollar terms, declined to 39 percent in the first quarter from 43 percent. For the mortgage industry, the MBA estimates that the share of purchases was 29 percent in the first quarter of this year.

The average balance on the first mortgage increased to a new research high of $ 288,551 in the first quarter. In the last quarter of 2020, the balance averaged $ 287,131.

Productivity dropped to 3.6 credits per production worker per month from 4.2 credits. Production employees include sales, execution and production support functions. The average closing rate (closing of application loans) fell from 78 percent to 76 percent.

Net income from financial services in the first quarter (excluding APRs) 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 less hedging gains / losses and MSR wholesale gains / losses, was $ 65 per loan versus $ 50 per loan in the previous quarter.

Eighty-three percent of the 366 companies that submitted production data for the first quarter of 2021 were independent mortgage companies, and the remaining 17 percent were subsidiaries and other non-depository organizations.


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