Spikes in production volume and secondary market income have independent mortgage banks whistling a happy tune this spring, according to a recent Mortgage Bankers Association (MBA) report.
The trade association’s Quarterly Mortgage Bankers Performance Report found that net production profits among independent mortgage bankers nearly doubled from the fourth quarter of 2014 to the first quarter of this year. Independent banks and mortgage subsidiaries of chartered banks reported a net gain of $1,447 on each loan they originated in the first quarter of the year, up from a reported gain of $744 per loan in the fourth quarter of 2014.
Average production volume was $473 million per company in the first quarter, up from $417 million per company in the fourth quarter of 2014. The volume by count per company averaged 1,917 loans in the first quarter, up from 1,769 loans in fourth-quarter 2014. The average production profit was 60 basis points in the first quarter, compared with an average net production profit of 32 basis points in fourth-quarter 2014.
Secondary marketing gains for these mortgage industry players improved by 31 basis points from fourth-quarter 2014 to the first quarter, a boost based largely on the increase in refinancing volume during the first quarter, MBA said.
However, the news isn’t all rosy. Total production operating expenses — commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations — per loan are still a challenge and increased to $7,195 per loan in the first quarter from $7,000 per loan in the fourth quarter. Personnel expenses averaged $4,675 per loan in the first quarter of 2015, up from $4,428 per loan in the fourth quarter of 2014.
The “net cost to originate” — including all production operating expenses and commissions, minus all fee income, but excluding secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread — was $5,597 per loan in the first quarter of 2015, up from $5,283 in the fourth quarter of 2014.
Productivity was unchanged, at 2.4 loans originated per production employee per month in the first quarter of 2015, MBA said.
