Home lender profits fell from their most recent high in the first quarter, but set a polling record for the period between January and March, the Mortgage Bankers Association reported Thursday.
The lenders achieved net income of $ 3,361, or 124 basis points of principal, on each loan they extended during the period. That's a decrease of $ 3,738, or 137 basis points, from the previous fiscal year, but it's still very high historically.
In the history of the MBA poll, which dates back to 2008, mortgage lenders have made an average of 55 basis points in profit on each loan; and only at one other point before 2020 did profitability go into the three-digit range. That was during the refinancing boom in 2012. At that time, profitability peaked at just under 120 basis points.
In other words, the latest round of profitability metrics suggest that it is just "a little less spectacular" than it was in the previous quarter, Marina Walsh, vice president of industry analysis for the Mortgage Bankers Association, told an interview.
"Remember, we're at 124 basis points, so we still have a way to go before we even get to normal levels," said Walsh.
Previous market indicators suggest that earnings per loan could continue to slowly decline while remaining historically strong.
The MBA predicts that total production in the second quarter will decrease slightly from $ 1.09 trillion in the previous fiscal period to $ 1.05 trillion. Average production volume for a single company in the first quarter was $ 1.44 billion, or 4,879 loans, compared to $ 1.47 billion or 5,049 units in the previous quarter.
The proportion of purchases fell from 43% to 39% in the first quarter, likely in part due to the seasonal weakness of the property market during the period. However, the shopping market typically recovers in the second quarter and has been particularly hot recently due to high household formation rates and inventory shortages.
Purchase credits generally require a higher outlay than refinancing, so production costs are likely to spike when the second quarter numbers are available. Even in the first quarter when purchases were weaker, manufacturing spend rose slightly to $ 7,964 per loan from $ 7,938 in the previous fiscal year.
These numbers show that not only have profits been historically high lately, but expenses have also been high. The average spend during the MBA survey period is $ 6,621 per loan. The MBA accounts for commissions, allowances, occupancy, equipment, company assignments, and other expenses in its calculations for this number.
The lion's share of spending in the first quarter was still on staff at $ 5,523 per loan compared to $ 5,426 in the prior fiscal year; and productivity fell from 4.2 to 3.6 monthly credits per employee during the reporting period.
Although issuance numbers were generally a little weaker in the first quarter, the proportion of mortgage lenders with net pre-tax financial profits from their service and manufacturing operations combined rose from 95% to 97%. Net operating income increased to $ 154 per loan in the first quarter, compared to $ 5 per loan in the prior fiscal year.
The MBA figures reflect the results of independent mortgage lenders and housing associations from charter banks.