Independent Mortgage Bankers Profits in U.S. Increase in Q2

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According to the Mortgage Bankers Association's Quarterly Mortgage Bankers Performance Report, independent mortgage banks and mortgage subsidiaries of chartered banks reported a net gain of $1,522 on each loan they originated in the second quarter of 2015, up from a reported gain of $1,447 per loan in the first quarter of 2015.

Average company production volume was up in the second quarter, as purchase volume grew and mortgage pipelines from the first quarter's refinance boom closed," said Marina Walsh, MBA's Vice President of Industry Analysis. "The production volume increase resulted in a nominal decrease in per-loan production expenses, which offset a decrease in secondary marketing income.  However, by historical standards, production expenses remained elevated given that the average company production volume was at the highest level since inception of the study in 2008."

Other key findings of MBA's Quarterly Mortgage Bankers Performance Report include:

• Average production volume reached $657 million per company in the second quarter of 2015, up from $473 million per company in the first quarter of 2015.  The volume by count per company averaged 2,714 loans in the second quarter of 2015, up from 1,917 loans in the first quarter of 2015.

• The average production profit was 67 basis points (bps) in the second quarter, compared to an average net production profit of 60 bps in the first quarter of 2015.

• The purchase share of total originations, by dollar volume, was 62 percent in the second quarter of 2015, up from 51 percent in the first quarter of 2015.  For the mortgage industry as a whole, MBA estimates the purchase share at 57 percent in the second quarter of 2015.

• The jumbo share of total first mortgage originations by volume was 9.07 percent in the second quarter compared to 8.74 percent in the first quarter.

• The average loan balance for first mortgages grew to a study high of $244,350 in the second quarter of 2015, from $242,791 in the first quarter.

• Secondary marketing income was 294 basis points in the second quarter of 2015, down from 297 basis points in the first quarter.

• Total loan production expenses - commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations - decreased to $6,984 per loan in the second quarter of 2015, from $7,195 in the first quarter of 2015.

• Personnel expenses averaged $4,632 per loan in the second quarter of 2015, down from $4,675 per loan in the first quarter.

• The "net cost to originate" was $5,372 per loan in the second quarter of 2015, down from $5,597 in the first quarter.  The "net cost to originate" includes all production operating expenses and commissions, minus all fee income, but excludes secondary marketing gains, capitalized servicing, servicing released premiums, and warehouse interest spread.

• Productivity increased to 2.8 loans originated per production employee per month in the second quarter of 2015 compared to 2.4 in the first quarter.

• Including all business lines, 92 percent of the firms in the study posted pre-tax net financial profits in the second quarter of 2015, up from 88 percent in the first quarter of 2015.