ABOUT TIME: Cost to originate mortgages finally gets cheaper
After barely surviving the subprime crisis and housing collapse, and then enduring the agony of burdensome regulatory changes and the advent of a new mortgage watchdog, mortgage originators finally, FINALLY, have some good news to spread.
Well, it only took about 8 years but. the Mortgage Bankers Association just said that total loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – decreased to $6,984 per loan in the second quarter of 2015, from $7,195 in the first quarter of 2015.
This is after years of mortgage production cost slowing inching their way up into the stratosphere. Here's a laundry list of that sad, cruel progression.
What's more, independent mortgage banks and mortgage subsidiaries of chartered banks reported a net gain of $1,522 on each loan they originated in the second quarter of 2015, up from a reported gain of $1,447 per loan in the first quarter of 2015,reported today in its Quarterly Mortgage Bankers Performance Report.
“Average company production volume was up in the second quarter, as purchase volume grew and mortgage pipelines from the first quarter’s refinance boomlet closed,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “The production volume increase resulted in a nominal decrease in per-loan production expenses, which offset a decrease in secondary marketing income.
“However, by historical standards, production expenses remained elevated given that the average company production volume was at the highest level since inception of the study in 2008,” she said.
Other key findings of MBA’s Quarterly Mortgage Bankers Performance Report include:
- Average production volume reached $657 million per company in the second quarter of 2015, up from $473 million per company in the first quarter of 2015. The volume by count per company averaged 2,714 loans in the second quarter of 2015, up from 1,917 loans in the first quarter of 2015.
in the first quarter of 2015.
- The "net cost to originate" was $5,372 per loan in the second quarter of 2015, down from $5,597 in the first 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 increased to 2.8 loans originated per production employee per month in the second quarter of 2015 compared to 2.4 in the first quarter.
- Including all business lines, 92% of the firms in the study posted pre-tax net financial profits in the second quarter of 2015, up from 88% in the first quarter 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. 74% of the 354 companies that reported production data for the second quarter of 2015 were independent mortgage companies and the remaining 26% were subsidiaries and other non-depository institutions.Source: www.housingwire.com