Third-quarter profitability fell to 2008 levels in the Mortgage Bankers Association's latest report, suggesting the seasonally slower fourth quarter could be particularly challenging this year.
Independent mortgage banks and mortgage subsidiaries of chartered banks generated a net gain of $480 per loan during the third quarter, an amount that was a little over half of year-ago levels and down 17% from
"These are very challenging times for independent mortgage bankers, with the average pretax net production income per loan reaching its lowest level for any third quarter since inception of our report in 2008," Marina Walsh, the MBA's vice president of industry analysis, said in a press release.
"Profitability continues to be hindered by high costs and low productivity. We expect fixed costs to remain elevated, and competitive pressures will continue to hamper production revenues in the winter months. Therefore, mortgage banker profitability will likely remain challenged."
While third-quarter profitability was the lowest since the MBA's study got underway in 2008, the home-purchase mortgage share of originations by dollar volume (82%) was the highest it's ever been in the history of the report.
"Mortgage servicing remains a bright spot for bankers, with relatively low delinquencies and high loan balances driving up per-loan servicing revenues," Walsh added. "Including all business lines (both production and servicing), 71% of the firms in the study posted a pretax net financial profit in the third quarter. Without servicing, that percentage would have dropped to 52%."
