Independent mortgage banks and mortgage subsidiaries of chartered banks managed to grow profits from the fourth quarter despite lower interest rates and production volume, the Mortgage Bankers Association said in its Quarterly Mortgage Bankers Performance Report.
These banks and subsidiaries reported a net gain of $825 per loan originated during the first quarter, up 67% from the fourth quarter of 2015, the MBA said Tuesday. Still, profits per loans were down from a year ago, when they were $1,447, thanks in large part to declining volume and higher production expenses.
Average production volume came to $517 million per company in the first quarter of 2016, down from $538 million per company in the previous quarter. Productivity fell to two loans originated per production employee per month from 2.4 loans during the fourth quarter.
On a basis points level, pretax production profit averaged 33 basis points in the first quarter versus 22 basis points in the linked quarter and 60 basis points a year ago.
Total loan production expenses — which include everything from commissions and compensation to occupancy and equipment — increased to $7,845 per loan in the first quarter of 2016, from $7,747 in the fourth quarter of 2015.
On the servicing side, there was a net loss of $118 per loan during the first quarter, compared to a net gain of $107 per loan in the fourth quarter of 2015. The swing to a loss stemmed mainly from impairments to mortgage servicing rights as a result a dip in mortgage interest rates.
