Independent mortgage bankers and mortgage subsidiaries of chartered banks experienced a tough start to 2018 as the profitable fourth quarter of 2017 was replaced with losses.
The Mortgage Bankers Association says that these lenders saw a net loss of $118 for every loan they originated in Q1 2018 compared with the net gain of $237 per loan at the end of last year.
"In the first quarter of 2018, falling volume drove net production profitability into the red for only the second time since the inception of our report in the third quarter of 2008," said Marina Walsh, MBA's Vice President of Industry Analysis. "While production revenues per loan actually increased in the first quarter, we also reached a study-high for total production expenses at $8,957 per loan, as volume dropped."
She added that profitability was better for those mortgage bankers with servicing rights due to higher per-loan servicing revenues and gains on the valuation of servicing.
The loss in Q1 2018 was only the second since MBA started keeping records in 2008 but was below the $194 net loss per loan recorded in Q1 2014.
Production volume declines
Average production volume was $450 million per company in the first quarter of 2018, down from $505 million per company in the fourth quarter of 2017. Each company averaged 1,866 loans in the quarter, down from 2,059 loans in the fourth quarter of 2017.
For the mortgage industry as a whole, MBA estimates for production volume in the first quarter of 2018 were lower compared to the previous quarter.
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