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IMB Data Shows Significant Profit Increases

According to the new data from the MBA's Quarterly Mortgage Bankers Performance Report, "independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks" reported a net gain of more than $2,500 on loans originated during Q3 2021. This was an increase over the previously reported Q2 2021 net gain of $2,023 per loan.

The MBA data notes that, accounting for "both production and servicing operations," 92% of firms posted profitability for Q3. That's up compared to 84% in Q2.

In a statement, Marina Walsh, CMB, MBA's VP of Industry Analysis, said, "Net production profit rebounded in the third quarter of 2021 after a drop-off in the second quarter, but was down more than half from the record profit one year ago. Production revenue was the difference-maker, increasing more than 20 basis points from the second quarter. However, production revenue was still down almost 80 basis points compared to a year ago."

Walsh also noted that per-loan production expenses reached the second-highest level ever reported, having continued a rise that has extended over five consecutive quarters.

"Rising sales costs that are often determined based on a percentage of loan balances was one primary factor for the increase in expenses," Walsh continued. "The average loan balance for first mortgages reached another study-high in the third quarter, passing the $300,000 threshold for the first time to over $308,000."

Other key datapoints from the MBA IMB report included:

  • Average pre-tax production profit was 89 basis points (bps) in Q3 2021 (Q2 2021 was 73 bps). This was down from 203 basis points year-over-year. "Average quarterly pre-tax production profit" is 56 basis points (from Q3 2008 to the most recent quarter).
  • Average production volume was $1.17 billion per company in Q3. This represents a drop from $1.35 billion per company in Q2. Average volume by count per company was 3,889 loans in Q3, down from 4,615 loans in Q2.
  • Purchase share of total originations (by dollar volume), increased to 59% in Q3, up from 57% in Q2.
  • Average loan balance for first mortgages increased to $308,237 in Q3, up from $297,816 in Q2. Per MBA, this was "a new study high."
  • Personnel expenses averaged $6,185 per loan in Q3. This was an increase from $5,911 per loan in Q2.

To read more of MBA's findings regarding IMB profits, click here.

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport, with more than six years of writing experience. She has served as Editor-in-Chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington. She has covered events such as the Byron Nelson, Pac-12 Conferences, the Women in Dallas Film Festival, to freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, she is an avid jazz lover and reader. She can be reached at demetria.lester@thefivestar.com.
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