Independent mortgage bankers saw their production and profitability climb during the second quarter, but commissions continued their four-month slide.
According to a trend report by accounting and business advisory firm Richey May & Co., overall production among independent bankers jumped 11% from Q1 to Q2, and net income margins also rose.
“Production climbing was an effect of the rates staying low during the second quarter,” said Trevor Reinhart, Richey May manager of advisory services. “We think the third quarter’s going to be down somewhat from the second quarter.”
Although loan margins constricted somewhat, net worth among independent mortgage bankers rose by about 20% in Q2, according to the report. Net worth has increased by about 34% since the end of 2012.
“Loan margins constricted a little bit; what stayed steady and what helped (mortgage professionals) a little bit is that their employment costs didn’t rise,” Reinhart said.“…Even though margins were constricting, being able to control their overhead allowed them to add to the bottom line.”
However, commissions – which reached a 4-month high of 82 basis points in the fourth quarter of 2012 – continued to decline. In the second quarter of 2013, they averaged about 72 basis points, with a 4-month average of around 80 basis points.
“The commissions we’re looking at on a per-loan basis,” Reinhart said.“I think what has occurred is that while companies have been actively increasing their employment size, it didn’t increase nearly as much as production did. I think it’s somewhat artificial. There was a big spike in production for the second quarter, so on a per-loan basis, the commissions looked lower.”