Mortgage

Non-bank mortgage lending earnings rose within the third quarter, however so did spending

Higher manufacturing yields led to a rebound in profitability for independent mortgage lenders in the third quarter, but spending hit its second highest level since the Mortgage Bankers Association began recording this data.

Independent mortgage lenders posted net income of $ 2,594 per loan, or 89 basis points, for the third quarter, compared to $ 2,023 (73 basis points) in the second quarter. This is well below the record $ 5,535, or 203 basis points, earned in the third quarter of 2020.

The total cost of production for loans, which includes commissions, compensation, occupancy, equipment, and other production costs and corporate grants, increased to $ 9,140 per loan in the third quarter, compared to $ 8,668 per loan in the second quarter.

"Rising distribution costs, often determined based on a percentage of loan balances, were a major driver of the increase in spending," said Marina Walsh, vice president of industry analysis for the MBA, in a press release. "The average loan balance for first mortgages reached another study high in the third quarter, exceeding the $ 300,000 mark to over $ 308,000 for the first time."

Loan officer's commissions are a percentage of the loan balance; A report by SimpleNexus LBA Ware for the third quarter found that the average consideration for a purchase loan was 108 basis points, unchanged from three months earlier.

Staff costs averaged $ 6,185 per loan for the third quarter, the MBA found. This compares to $ 5,911 per loan in the second quarter and $ 7,452 in the third quarter last year.

Meanwhile, total production revenue, including fee income, net secondary labeling income, and inventory markup, rose to 396 bps in the third quarter, up from 375 bps in the second quarter, but less than 475 bps. On a loan basis, third quarter manufacturing revenue per loan increased to $ 11,734, compared to $ 10,691 quarterly; A year ago it was $ 12,987.

Average production volume per company in the third quarter was $ 1.17 billion, compared to $ 1.35 billion in the second quarter as unit numbers fell from 4,615 credits to an average of 3,889 credits over the same period.

At the same time, independent mortgage bankers reported net financial income of $ 37 per loan in the third quarter, up from $ 7 in the second quarter and a loss of $ 30 in the third quarter of 2020.

Including production and service, 92% of the companies surveyed achieved net financial profit before tax in the third quarter, compared with 84% in the second quarter; however, a year earlier, 99% of these independent mortgage lenders and mortgage subsidiaries of banks were profitable.

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