Q2 Mortgage Banking Profits Surge, Highest Since Report Began in 2008

Mortgage bankers saw
their profits surge during the second quarter of 2012, increasing from $1,654 on
each loan originated in the first quarter of the year to $2,152.  The information comes from the Mortgage
Bankers Association’s (MBA) Quarterly
Mortgage Bankers Performance Report
which covers data from 305 independent
mortgage banks
and mortgage subsidiaries of chartered banks.  Ninety-five percent of the firms posted
pre-tax net financial profits in the second quarter of 2012, compared to 93
percent in the first quarter.

MBA said that average
production volume
was $371 million per company in the second quarter, up from
$301 million per company in the first quarter. The average volume by count per
company rose to 1,700 loans in the second quarter, from 1,380 in the first
quarter.  Productivity improved to 3.6
loans originated per production employee per month in the second quarter, from
3.3 in the first quarter.

“With the surge in
production volume in the second quarter, net production profits among
independent mortgage bankers increased, surpassing 100 basis points for the
first time since inception of our report in 2008
,” said MBA Associate Vice
President of Industry Analysis Marina Walsh. “Secondary marketing gains
improved by almost 14 basis points over the first quarter, the result of
widening spreads between the primary and secondary markets. With the record volume,
total production operating expenses also decreased by $164 per loan over the
first quarter.”

In basis points, the
average production profit (net production income) was 107 basis points in the
second quarter, compared to 82 basis points in the first quarter and secondary
marketing income
increased to 257 basis points in the second quarter, compared
to 243 basis points in the first quarter.  

The “net cost to
originate
” was $3,224 in the second quarter, down from $3,413 per loan in
the first quarter. The “net cost to originate” includes all
production operating expenses and commissions minus all fee income, but
excludes secondary marketing gains, capitalized servicing, servicing released
premiums and warehouse interest spread.  Personnel
expense
decreased to $3,246 per loan in the second quarter, compared to $3,350 in
the first quarter and total production operating expenses – commissions,
compensation, occupancy and equipment, and other production expenses and
corporate allocations – were $5,128 per loan in the second quarter compared to $5,292
in the first quarter.

The purchase share of
total originations, by dollar volume, was 48 percent in the second quarter, up
from 42 percent
in the first quarter. For the mortgage industry as whole, MBA
estimates the purchase share at 26 percent in the second quarter of 2012, from
25 percent in the first quarter.

Article source: http://www.mortgagenewsdaily.com/08302012_mortgage_lending.asp

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