Small mortgage banking companies experienced a 55% jump in profitability in the first quarter, compared to the prior quarter, despite flat originations and higher expenses.
The Mortgage Bankers Association reported Friday morning that the average profit per loan originated in the first quarter was $1,654, up from $1,093 in the fourth quarter.
The 317 independent mortgage banks and mortgage subsidiaries of banks covered by the MBA survey originated on average $301 million in loans during the reporting period, compared to $314 million in loans during the fourth quarter.
Due to capacity issues and strong loan demand, lenders were able to increase their origination fees.
The MBA Mortgage Bankers Performance Report shows origination fees rose 15% from 4Q to $1,209 per loan in 1Q, while secondary market income jumped 13% to $5,011.
Most of the small lenders don’t have servicing portfolios and are not active in refinancing GSE loans under the Home Affordable Refinance Program.
Industrywide, refinancings comprised 75% of originations in 1Q, but only 58% of loan production for the 317 respondents in the MBA survey.
“Independent mortgage bankers remained focused on purchase production, while the many larger banking institutions were handling significantly more refinancing activity,” said Marina Walsh, the MBA's associate VP of industry analysis.
She noted that large and small lenders were “struggling with fulfillment issues”—underwriting and closing the loans—during the first quarter.
