WASHINGTON, DC – December 13, 2012 – (RealEstateRama) — Independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $2,465 on each loan they originated in the third quarter of 2012, up from $2,152 per loan in the second quarter, the Mortgage Bankers Association (MBA) reported today.
“Both purchase volume and refinancing volume increased in the third quarter, resulting in higher net production profits among independent mortgage bankers,” said MBA Associate Vice President of Industry Analysis Marina Walsh. “Secondary marketing gains improved by 14 basis points over the second quarter. However, per loan expenses remained flat despite higher volumes.”
Among the other key findings of MBA’s Quarterly Mortgage Bankers Performance Report are:
• In basis points, the average production profit (net production income) was 120 basis points in the third quarter, compared to 107 basis points in the second quarter.
• Average production volume was $450 million per company in the third quarter, up from $371 million per company in the second quarter. The average volume by count per company rose to 2,010 loans in the third quarter, from 1,700 in the second quarter.
• The refinancing share of total originations, by dollar volume, was 57 percent in the third quarter, up from 52 percent in the second quarter. For the mortgage industry as whole, MBA estimates the refinancing share at 73 percent in the third quarter of 2012, up from 67 percent in the second quarter.
• Measured in basis points, secondary marketing income increased to 271 basis points in the third quarter, compared to 257 basis points in the second quarter.
• Total loan production expenses – commissions, compensation, occupancy and equipment, and other production expenses and corporate allocations – increased slightly to $5,163 per loan in the third quarter, from $5,128 in the second quarter.
• Personnel expenses averaged $3,320 per loan in the third quarter, from $3,246 per loan in the second quarter.
• The “net cost to originate” was $3,353 in the third quarter, from $3,224 per loan in the second quarter. The “net cost to originate” includes all production operating expenses and commissions minus all fee income, but excludes secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread.
• Productivity improved to 3.9 loans originated per production employee per month in the third quarter, from 3.6 in the second quarter.
• 97 percent of the firms in the study posted pre-tax net financial profits in the third quarter of 2012, compared to 95 percent in the second quarter.
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.
70 percent of the 311 companies that reported production data for the third quarter report were independent mortgage companies.
There are five performance report publications per year: four quarterly reports and one annual report.
For media inquiries, contact Matt Robinson 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 clicking here.
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 2,200 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. For additional information, visit MBA’s Web site: www.mortgagebankers.org.