Although higher mortgage originations help reduce per-loan expenses, a decline in secondary marketing income more than offset lower expenses.
Average third-quarter residential loan originations at independent mortgage bankers and subsidiaries of banks and thrifts came out to 1,929 mortgages for $445 million.
Mortgage production strengthened from the second quarter, when an average of 1,744 loans were closed for $395 million.
The findings were outlined in the Mortgage Bankers Association’s Quarterly Mortgage Bankers Performance Report Q3 2014.
While 347 mortgage origination firms participated in the survey, the second- and third-quarter comparisons were based on the 316 companies that participated in both periods.
In the third-quarter 2013, average originations at all participating firms were 1,788 loans for $391 billion.
Monthly volume averaged 2.41 loans per production employee. Although productivity was better than the second-quarter’s 2.17 loans per employee, it dropped off from 2.47 loans in the third-quarter 2013.
The average sales employee closed 6.8 loans per month.
Origination fees averaged 55 BPS, up slightly from the second quarter’s 54 BPS and down from 57 BPS in the third-quarter 2013.
Third-quarter 2014 origination fees jumped to 90 BPS for companies that closed between $50 and $100 million per quarter and sank to 29 BPS at lenders that originated in excess of $250 million.
Lenders earned an average of 43 basis points in net production income, off from 44 BPS three months earlier but better than 38 BPS a year earlier.
“Average company production volume was up in the third quarter, which resulted in a nominal decrease in per-loan production expenses,” MBA Vice President of Industry Analysis Marina Walsh said in the report. “At the same time, the average loan balance for first mortgages reached its highest level since inception of the Quarterly Mortgage Bankers Performance Report in 2008. Nonetheless, production profits were slightly down because of a decrease in secondary marketing income.”
The most-recent net production income figure reflected a negative 222 BPS in net loan production operating income, 6 BPS in net interest income and 260 in net secondary marketing income.
Net production income was 31 BPS at lenders that funded less than $50 million and jumped to 47 BPS at companies that closed more than $250 million.
Retail-only lenders earned 49 BPS in net production income, while companies with at least three-quarters of their business generated through the wholesale channel earned 44 BPS.
