Independent mortgage bankers profits are up, according to the Mortgage Bankers Association’s [1] (MBA) Annual Mortgage Bankers Performance Report. Independent mortgage banks and mortgage subsidiaries of chartered banks made an average of $157 more on average per loan originated in 2016 compared to 2015.
"Average production volume for companies in our Annual Performance Report rose in 2016, reflecting a larger industry trend of increasing volume in 2016 over 2015, based on MBA industry estimates," said Marina Walsh, MBA VP of Industry Analysis.
"Average loan balances also rose, reaching a study-high $244,945 for first mortgages in 2016," Walsh continued. "This translated into higher revenues that reached a study-high $8,555 per loan in 2016. Yet production expenses also reached a study-high, at $7,209 per loan, and offset a portion of these revenue improvements. The net result was a slight increase in overall net production income."
The report also found that average production volume was $2,679 million per company, another increase from 2016’s $2,504 million per company. The MBA estimates total production volume in 2016 to be $1.89 trillion, an increase from 2015’s 1.68 trillion.
The average production profit rose 6 basis points year-over-year. From 52 points in 2015 to 58 points in 2016. However, 2016 did see a slight drop within the year. Net production income averaged 61 basis points during the first half of 2016, but dropped to 55 in the second half of the year. The MBA reports that the purchase share of total originations by dollar volume dropped slightly in in 2016, from 64 percent in 2015 to 62 percent.
More firms posted pre-tax net financial profits in 2016 than 2015, up to 94 percent compared to 2015’s 92 percent. The MBA surveyed 280 firms, 76 percent of which were independent mortgage companies. The other 24 percent were mortgage subsidiaries and other non-depository institutions.