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Independent Mortgage Bankers’ Quarterly Profits Dip

Independent mortgage bankers' profits declined since the first quarter of the year but remain above average, the latest numbers show.

Independent mortgage banks, along with mortgage subsidiaries of chartered banks, reported a net gain of $2,023 on each loan they originated in Q2 2021, down from a reported gain of $3,361 per loan in the first quarter of the year [1], according to the Quarterly Mortgage Bankers Performance Report published by Mortgage Bankers Association (MBA). That makes for the lowest net production profits since the first quarter of 2019, but the totals remained above their historic quarterly average, said Marina Walsh, CMB, MBA's VP of Industry Analysis.

"Competition stiffened, production volume declined, and the market began to shift toward more purchase activity and less refinances. The result for mortgage lenders was a combination of lower revenues and higher expenses."

Added Walsh, "Production revenues have declined for three straight quarters, and per-loan production expenses have increased for four straight quarters. This is a strong indication that the industry is moving away from the record-high profits of 2020."

Walsh also noted a decline in servicing profitability, resulting from mortgage servicing right (MSR) markdowns and increased operating expenses. Combining both production and servicing operations, 85% of firms posted overall profitability for the second quarter of 2021, compared to 97% in the first quarter.

Further key findings from the report included (from MBA summary [2]):

The entire performance report is available at MBA.org/performancereport [3].