Mortgage loan profits tumbled by 14
percent in the second quarter of 2013 the Mortgage Bankers Association (MBA) said
on Friday. Independent mortgage banks
and mortgage subsidiaries of chartered banks reporting to an MBA survey said
they had an average profit of $1,528 on each loan they originated during the
quarter compared to $1,772 on each loan in Quarter 1. In basis points, the average production
profit or net income was 75 basis points, down from 86 basis points in the
MBA's Quarterly Mortgage Bankers Performance Report said that, measured
by dollar volume, the purchase share of originations increased from 40 percent
in the first quarter to 52 percent in the second. This was the first time purchase originations
had taken the majority share of originations since the third quarter of
2011. MBA estimates that the purchase
share for the entire industry was 36 percent in the second quarter compared to
26 percent in the first.
overall volume remained relatively flat, we are seeing a shift in product mix
towards purchase originations," said MBA Associate Vice President of Industry
Analysis Marina Walsh. "Per-loan production costs continue to
rise and there are signs of pricing pressure as evidenced by the reduction in
secondary marketing income."
Total loan production
expenses--commissions, compensation, occupancy, equipment, and other production
expenses and corporate allocations--increased to $5,818 per loan in the second
quarter, from $5,779 in the first quarter. Personnel expenses averaged $3,808
per loan compared to $3,785 previously.
Companies reporting to MBA regarding
their second quarter operations had an average of 261 production employees, ten
more than the average reported in the first quarter. However, among those companies which reported
in both quarters, the average had increased to 271. Productivity was down slightly to 2.9 loans
per production employee per month from 3.1 loans in the first quarter.
The net cost to originate, including all production operating expenses and
commissions minus all fee income was $4,207, up from $4,182 per loan. The net cost to originate excludes secondary
marketing gains, capitalized servicing, servicing released premiums, and warehouse
interest spread. Secondary marketing
income declined to 263 basis points in the second quarter, compared to 274
basis points in the first quarter
Lenders reported they had originated an
average of 1,921 loans in the second quarter, slightly fewer than in the first
quarter when the average was 1,953.
Average production income was $439 million per company, down from $442
million. 92 percent of the firms in the
study posted pre-tax net financial profits in the second quarter, down from 94
percent of the firms in the first quarter.