“Production profits dropped slightly in the third quarter of 2015 compared to the second quarter of 2015. However, on a year-over-year basis, production profits were up,” Marina Walsh, MBA’s vice president of industry analysis, said in a release. “In the third quarter of 2015, profits were $1,238 per loan (55 basis points), compared to $897 per loan (42 basis points) in the third quarter of 2014.”
The average company produced $614 million in volume during the third quarter, down from $657 million per company in Q2, according to the association’s Quarterly Mortgage Bankers Performance Report.
The average company also averaged fewer loans in Q3 – 2,609, down from 2,714 in Q2.
“The average production volume in the third quarter of 2015 was significantly higher at $614 million per company, compared to $437 million per company in the third quarter of 2014,” Walsh said. “At the same time, the share of purchase production to total production by dollar volume was similar at 70 and 72% respectively."
The report also found the purchase share of total originations was 70% in Q3, up from 62% the previous quarter. This points to a growing reliance on purchases over refinances, which originators have come to expect.
And overall, fewer mortgage companies posted pre-tax net financial profits. 86% of companies who participated in the study posted pre-tax net profits, down from 92% in Q2.
Fear not originators; profits may be down from last quarter, but they’re up year-over-year according to the Mortgage Bankers Association.