Independent Mortgage Banker Profits Up in 2015 Driven by Higher Volume and Larger Loan Balances

WASHINGTON, D.C. – April 13 28, 2016 – (RealEstateRama) — Independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $1,189 on each loan they originated in 2015, up from $747 per loan in 2014, the Mortgage Bankers Association (MBA) reported today in its Annual Mortgage Bankers Performance Report.

“Despite a drop in profits in the second half of the year compared to the first half, full-year 2015 net production profits were 52 basis points, 18 basis points higher year over year, with higher production volume,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “Profits in 2015 were just below the annual average of 55 basis points since the inception of the Performance Report in 2008.  However, because of larger loan balances, per-loan profits were at their third highest levels since 2008.  Average loan balances for this sample grew 7 percent from 2014 to 2015 and have grown 22 percent since 2008.”

Among the other key findings of MBA’s Annual Mortgage Bankers Performance Report are:

  • In basis points, the average production profit (net production income) was 52 basis points in 2015, compared to 34 basis points in 2014. In the first half of 2015, net production income averaged 65 basis points, then dropped to 39 basis points in the second half of 2015.  The average production profit for the period 2008-2015 was 55 basis points.
  • Average production volume was $2.40 billion (9,906 loans) per company in 2015, compared to $1.57 billion (6,779 loans) per company in 2014. On a repeater company basis, average production volume increased by 48 percent to $2.48 billion (10,183 loans) in 2015, from $1.68 billion (7,243 loans) in 2014.
  • Average loan balances increased 7 percent to $239,265 from $223,108 in 2014.
  • Total loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – increased to $7,046 per loan in 2015, up slightly from $6,950 in 2014. In the first half of 2015, total production expenses averaged $6,893 per loan, then rose to $7,272 per loan in the second half of 2015.
  • Personnel expenses averaged $4,699 per loan in 2015, up from $4,500 per loan in 2014.
  • The “net cost to originate” was $5,567 per loan in 2015, up from $5,200 in 2014. The “net cost to originate” includes all production operating expenses and commissions, minus all fee income, but excluding secondary marketing gains, capitalized servicing, servicing released premiums, and warehouse interest spread.
  • Productivity was 2.20 loans originated per production employee per month in 2015, up from 2.05 in 2014.
  • Secondary marketing income plus origination fees rose to 330 basis points in 2015, from 321 basis points in 2014.
  • The purchase share of total originations, by dollar volume, decreased to 64 percent in 2015, from 71 percent in 2014. For the mortgage industry as whole, MBA estimates the purchase share at 54 percent in 2015, down from 60 percent in 2014.
  • Including all business lines, 92 percent of the firms in the study posted pre-tax net financial profits in 2015, up from 82 percent in 2014. In the first half of 2015, 93 percent of reporting firms posted pre-tax financial profits, compared to 83 percent in the second half of 2015.

MBA’s Mortgage Bankers Performance Report series offers a variety of performance measures on the mortgage banking industry and is intended as a financial and operational benchmark for independent mortgage companies, bank subsidiaries, and other non-depository institutions. 72 percent of the 276 companies that reported production data for the full-year 2015 were independent mortgage companies and the remaining 28 percent were subsidiaries and other non-depository institutions.

Media wishing to view a copy of either report should contact Ali Ahmad at (202) 557-2727 or . To purchase or subscribe to the publications, call (202) 557-2879. The reports can also be purchased on MBA’s website by visiting www.mba.org/PerformanceReport.

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Ali Ahmad


(202) 557- 2727

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MBA

The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field.

Contact:

Mortgage Bankers Association
1331 L Street, NW
Washington, DC 20005

Phone: (202) 557-2700

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