WASHINGTON, D.C. – March 31, 2015 – (RealEstateRama) — Independent mortgage banks and mortgage subsidiaries of chartered banks reported a net gain of $744 on each loan they originated in the fourth quarter of 2014, down from a reported gain of $897 per loan in the third quarter of 2014, the Mortgage Bankers Association (MBA) reported today in its Quarterly Mortgage Bankers Performance Report.
“Production profits dropped slightly in the fourth quarter of 2014 compared to the third quarter of 2014. However, on a year-over-year basis, production profits were up,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “In the fourth quarter of 2014, profits were $744 per loan (32 basis points), compared to $150 per loan (9 basis points) in the fourth quarter of 2013. In addition, 74 percent of participating companies had overall positive pre-tax profits in the fourth quarter of 2014 compared to only 58 percent in the fourth quarter of 2013.”
Other key findings of MBA’s Quarterly Mortgage Bankers Performance Report include:
- Average production volume was $417 million per company in the fourth quarter of 2014, down from $437 million per company in the third quarter of 2014, but up from $367 million per company in the fourth quarter of 2013. The volume by count per company averaged 1,769 loans in the fourth quarter of 2014, down from 1,901 loans in the third quarter of 2014 but up from 1,641 loans in the fourth quarter of 2013.
- The average production profit was 32 basis points (bps) in the fourth quarter, compared to an average net production profit of 42 bps in the third quarter of 2014 and an average of 9 bps in the fourth quarter of 2013.
- The purchase share of total originations, by dollar volume, was 65 percent in the fourth quarter of 2014, compared to 72 percent in the third quarter of 2014. For the mortgage industry as a whole, MBA estimates the purchase share at 54 percent in the fourth quarter of 2014.
- The jumbo share of total first mortgage originations was 8.44 percent in the fourth quarter compared to 9.42 percent in the third quarter.
- The average loan balance for first mortgages grew to a study high of $233,655 in the fourth quarter of 2014, from $231,914 in the third quarter.
- Secondary marketing income was 266 basis points in the fourth quarter of 2014, compared to 261 basis points in the third quarter.
- Total loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – increased to $7,000 per loan in the fourth quarter of 2014, from $6,769 in the third quarter.
- Personnel expenses averaged $4,428 per loan in the fourth quarter of 2014, up slightly from $4,401 per loan in the third quarter.
- The “net cost to originate” was $5,238 per loan in the fourth quarter of 2014, from $5,038 in the third quarter. The “net cost to originate” includes all production operating expenses and commissions, minus all fee income, but excluding secondary marketing gains, capitalized servicing, servicing released premiums, and warehouse interest spread.
- Productivity was unchanged at 2.4 loans originated per production employee per month in the fourth quarter of 2014.
- Including all business lines, 74 percent of the firms in the study posted pre-tax net financial profits in the fourth quarter of 2014, down from 83 percent in the third quarter of 2014 but up from the 58 percent seen in the fourth quarter of 2013.
MBA’s Mortgage Bankers Performance Report series offers a variety of performance measures on the mortgage banking industry and is intended as a financial and operational benchmark for independent mortgage companies, bank subsidiaries and other non-depository institutions. 73 percent of the 338 companies that reported production data for the fourth quarter of 2014 were independent mortgage companies and the remaining 27 percent were subsidiaries and other non-depository institutions.
There are five performance report publications per year: four quarterly reports and one annual report. For media inquiries, contact Ali Ahmad at (202) 557-2727 or ">
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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, REITs, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s website: www.mba.org.
CONTACT
Ali Ahmad
(202) 557- 2727
