Mortgage Production Profits Sink

The average independent mortgage banker earned 39 basis points on loan originations during the three months ended Sept. 30.

Income deteriorated from 49 BPS during the preceding three-month period and plummeted from 74 BPS during the same three months last year.

Those were just some of the findings from the
Mortgage Bankers Association’s Quarterly Mortgage Bankers Performance Report Q3 2017.

The report reflects data provided by 347 independent mortgage banker or mortgage subsidiaries of chartered banks, though quarter-over-quarter comparisons were based on the 312 firms that participated in both the second- and third-quarter surveys.

Driving the decline from the second quarter was net secondary marketing income, which fell to 296 BPS from 307 BPS.

“Historically for this study, average production profits in the third quarter of the year have performed slightly below the second quarter,” MBA Vice President of Industry Analysis Marina Walsh stated in the report. “But production profits were also down in relation to historical averages for the third quarter.”

Income ranged from 22 BPS at companies with less than $0.050 billion in volume to 43 BPS at firms that originated at least $0.050 billion.

At mortgage bankers that originate exclusively through the retail channel, income was 48 BPS. It dropped to 30 BPS at firms with both retail and wholesale division, and was just 9 BPS at companies where at least than three-quarters of production came from wholesale.

Originations fees
climbed to 52 BPS from 48 BPS the prior period and 45 BPS a year prior. Origination fees were 70 BPS at companies with between $0.050 billion and $0.100 billion in quarterly originations, while it dropped to 37 BPS at lenders with more than $0.250 billion in production.

Average mortgage production at the surveyed firms was 2,322 loans for $0.568 billion, inching up from 2,308 loans for $0.558 billion in the second quarter. But average production fell from 3,072 loans for $0.764 billion.