Independent mortgage bankers again made money on every loan originated on a net basis in the third quarter, helped by the falling interest rate environment for most of the period.
This marks two consecutive periods of improved performance for the industry after eight quarters of loss, according to the Mortgage Bankers Association's latest industry performance report.
"Net production profits increased to 18 basis points last quarter — far improved from the
"Overall, it was a decent showing for independent mortgage banks with 71% reporting profitability across production and servicing operations, compared to 78% in the second quarter," she said.
MBA economists
For the quarter, IMBs and bank mortgage subsidiaries made an average pretax net profit of $701 per loan, an increase of $8
While originators reported lower revenues for the third quarter compared to the prior period, lower expenses offset the decline.
Total production revenue was 6 basis points lower. It was at 341 basis points in the third quarter, down from 347 basis points for the linked quarter. That translated to production revenues of $11,417 per loan versus $11,499 per loan over the same time frame.
Total loan production expenses decreased to 323 basis points in the third quarter from 330 basis points for the second quarter. In dollar terms, costs decreased to $10,716 per loan for the most recent period, down from $10,806 three months prior.
The 18 basis point margin was up from 17 basis points three months prior and a loss of 18 basis points one year earlier.
But that
As a result, net servicing financial income went negative, to a loss of $25 per loan serviced in the third quarter from a gain of $69 for the three months ended June 30. For the same period in 2023, servicing earned an average of $90 per loan.
That number includes amortization, gains or losses in the value of MSRs net of hedging and any gain or losses on the sale of bulk portfolios.
Without those items, servicing operating income was $93 per loan. That compared with $88 in the second quarter, but one year prior, they made $104.