According to the Mortgage Bankers Association's latest Quarterly Mortgage Bankers Performance Report, independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a net gain of $2,023 on each loan they originated in the second quarter of 2021, down from a reported gain of $3,361 per loan in the first quarter of 2021.
"Net production profits dropped to the lowest level since the first quarter of 2019, but still remained above their historic quarterly average," said Marina Walsh, CMB, MBA's Vice President of Industry Analysis. "Competition stiffened, production volume declined, and the market began to shift towards more purchase activity and less refinances. The result for mortgage lenders was a combination of lower revenues and higher expenses."
Added Walsh, "Production revenues have declined for three straight quarters, and per-loan production expenses have increased for four straight quarters. This is a strong indication that the industry is moving away from the record-high profits of 2020."
Walsh also noted that there was a decline in servicing profitability, resulting from mortgage servicing right (MSR) markdowns and increased operating expenses. Combining both production and servicing operations, 85 percent of firms posted overall profitability for the second quarter of 2021, compared to 97 percent in the first quarter.
Key findings of MBA's Report: