“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, vice president of industry analysis for the MBAs. “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% from 2014 to 2015, and have grown 22% since 2008.”
Among other key findings in the report were:
- Average production volume was $2.4 billion per company (9,906 loans on average) in 2015, compared to $1.57 billion, or 6,779 loans, in 2014. Net production income averaged 65 basis points in the first half of 2015 and dropped to 39 basis points in the second half.
- Average loan balances rose 7% to $239,265 in 2015.
- Total loan production expenses increased to $7,046 in 2015, up from $6,950 in 2014.
- Personnel expenses rose to an average of $4,699 per loan last year, up from $4,500 in 2014.
- The “net cost to originate” rose from an average of $5,200 in 2014 to $5,567 in 2015.
Independent mortgage banks saw profits rise last year, driven largely by higher volume and larger loan balances, according to new data from the Mortgage Bankers Association. Independent mortgage banks and mortgage subsidiaries of chartered banks saw an average profit of $1,189 on each loan originated in 2015, up from $747 per loan in 2014, the MBA found in its Annual Mortgage Bankers Performance Report.