Independent mortgage banks and mortgage subsidiaries of charter banks again saw strong business in the fourth quarter of 2020 – but smaller revenues on each loan they handled, according to a new Mortgage Bankers Association released Tuesday.
IMBs reported a net gain of $3,737 on each loan they originated in the quarter – down from a $5,535 in the third quarter, the Quarterly Mortgage Bankers Performance Report showed.
The report also found:
- The average pre-tax production profit was 137 basis points in the quarter, down from an average net production profit of 203 bps in the third quarter, but up on a year-over-year basis from 46 basis points in the fourth quarter of 2019.
- Average production volume was $1.47 billion per company in the fourth quarter, up from $1.34 billion per company in the third quarter. The volume by count per company averaged 5,049 loans in the fourth quarter, up from 4,732 loans in last year’s third quarter.
- Total production revenue (fee income, net secondary marking income and warehouse spread) decreased to 421 bps in the fourth quarter, down from 475 bps in the third quarter. On a per-loan basis, production revenues decreased to $ 11,676 per loan in the fourth quarter, down from $12,987 per loan in the third quarter.
“Driven by strong borrower demand and a study-high in average loan balances, production volume for independent mortgage companies reached unprecedented heights, averaging close to $1.5 billion per company in the fourth quarter of 2020. Net production profits were at their third-highest levels, surpassed only by last year’s second and third quarter,” said Marina Walsh, MBA’s Vice President of Industry Analysis.
Combining both production and servicing operations, 95 percent of firms posted overall profitability for the fourth quarter of 2020, the MBA report found.