A decrease in employee expense was behind a quarter-over-quarter improvement in mortgage production earnings. But there was year-over-year deterioration.
During the three months ended mid-2017, net production income at independent mortgage bankers and mortgage subsidiaries of chartered banks was 45 basis points.
Income soared from less than 9 BPS in the first quarter. The improvement was fueled by a 35-basis-point decline in personnel expense.
But earnings weakened from 73 BPS
in the second-quarter 2016. Behind the deterioration was a 35-basis-point rise in expenses.
Those were among a multitude of metrics in the 95-page Quarterly Mortgage Bankers Performance Report Q2 2017 from the Mortgage Bankers Association. The report can be purchased online by MBA members for $675 and for $1,125 by non-members.
MBA based its finding on surveys from 345 mortgage-banking firms, though just the 312 that participated in both the first- and second-quarter surveys were
used for prior-period comparisons.
“Production profitability improved in the second quarter as volume picked up with the Spring home buying season and a slight drop in mortgage rates,” Marina Walsh, MBA’s vice president of industry analysis, said in an accompanying news release. “Production revenues declined due to increased competition, but that was more than offset by per loan expenses dropping to levels comparable with other recent quarters of similar volume.”
At firms with more than $0.250 billion in quarterly production, net production income was 52 BPS, while it was just 5 BPS a lenders with less than $0.050 billion in originations.
Net production income at retail originators was 54 BPS. Income dropped to 37 BPS at companies that originate through both the retail and wholesale channels, and the net was just 11 BPS at organizations where more than three-quarter of business came from the wholesale channel.
Average origination fees were 49 BPS, more than 46 BPS the prior period and 42 BPS a year prior.
Originations fees at organizations with more than $0.250 billion in quarterly volumes averaged just 35 BPS. But at entities with less than $0.050 billion in production, average origination fees for 65 BPS.
Companies surveyed originated an average of 2,285 loans for $0.550 billion during the latest quarter.
Production was up from an average of 1,855 loans for $0.439 billion three months earlier but came up short of the 2,721 loans for $0.654 billion average one year earlier.
Average monthly closings per sales employee rose to 5.9 loans from 4.9 loans in the first quarter but fell from 7.4 loans in the second-quarter 2016.
