Independent mortgage banks reported strong results on loans in the first quarter of the year even in the face of a reduction in volume as the coronavirus pandemic took hold in March, the Mortgage Bankers Association reported Thursday
IMBs and mortgage subsidiaries of charted banks reported a net gain of $1,600 on each loan they originated in the quarter – up from $1,182 per loan in the fourth quarter of 2019, according to MBA’s Quarterly Mortgage Bankers Performance Report.
“Mortgage production profits were strong in the first three months of 2020 – despite a decline in production volume from the fourth quarter and March’s severe market volatility sparked by the COVID-19 pandemic,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “As credit spreads widened, revenues grew by 25 basis points from the fourth quarter, offsetting a reported increase in expenses.”
The report found:
- The average pre-tax production profit was 61 basis points (bps) in the first quarter, up from an average net production profit of 46 bps in the fourth quarter of 2019.
- Average production volume was $728 million per company in the first quarter, down from $800 million per company in the fourth quarter.
- The volume by count per company averaged 2,654 loans in the first quarter, down from 2,947 loans last quarter.
- Total production revenue (fee income, net secondary marking income and warehouse spread) increased to 362 bps in the first quarter, up from 337 bps in the fourth quarter.
- On a per-loan basis, production revenues increased to $9,582 per loan in the first quarter, up from $8,707 per loan in the fourth quarter.
- The average loan balance for first mortgages increased to a new study high of $276,291 in the first quarter, up from $271,972 in the fourth quarter.
“Overall, it was a solid showing for independent mortgage banks – particularly for a first quarter – with 78 percent reporting profitability across production and servicing operations, compared to 84 percent in the fourth quarter,” Walsh said.