Mortgage Bankers Association (MBA) recently took a look at the production profits for independent mortgage banks (IMB) and mortgage subsidiaries of chartered banks and saw a decline in production profits for the fourth quarter of 2021, but what might this mean for your bottom line?

Let’s explore some of the observations released in their Quarterly Mortgage Bankers Performance Report.

Both entities reported a net gain of $1,099 on each loan originated in the fourth quarter, which was down from the reported gain of $2,594 for each loan in the third quarter. Marina Walsh, CMB, MBA’s Vice President of Industry Analysis stated pre-tax net production income per loan had reached its lowest level since the first quarter of 2019. She stated the previous two years had experienced a run of above-average profitability. Walsh also added, “The average cost to originate a mortgage has now risen for six quarters in a row, reaching a study-high of almost $9,500 per loan by the end of 2021.”

Now, let’s look into some of the key findings

  • The average pre-tax production profit in the fourth quarter of 2021 was 38 basis points (bps), down from the 89 bps seen in quarter three of 2021.
  • Average production volume in the fourth quarter of 2021 was $1.13 billion per company, down from the third quarter’s $1.17 billion per company.
  • Total production revenue was 353 bps in the fourth quarter, down from the third quarters 396 bps.
  • Net secondary marketing income in the fourth quarter was 275 bps, a decrease from the third quarters 310 bps.
  • The purchase share of total originations, by dollar volume, was 60 percent in the fourth quarter, an increase from the third quarter’s 59 percent.
  • The average loan balance for first mortgages was $312,306 in the fourth quarter, an increase from the third quarter’s $308,237.
  • The average pull-through rate (loan closings to applications) was 78 percent in the fourth quarter, an increase from the third quarter’s 75 percent.

To continue reading the study’s key findings, click here.

With 2022 seeing declines in so many areas of the financial sector of the real estate industry, you’ll want as many tools as you can muster to hunt for areas of opportunity. This is where we can step in and help out.

The Warren Group’s Mortgage MarketShare Module lets you stay on top of today’s market changes by providing you with fast, reliable, real-time insights on your target market. Measure your sales performance against the competition, benchmark your company’s market share, and identify new and emerging trends. Just click here to what the module can do for you. If you want to add even more support to your toolkit, check out our Mortgage Data Solutions to access mortgage assignments and releases from 15 years of historical data.

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