Profitability in the housing finance business fell for the first time since the start of the pandemic during the fourth quarter of last year, according to a Mortgage Bankers Association report released Tuesday.
The average per-loan profit for independent mortgage companies and home-loan subsidiaries of chartered banks was down by roughly one-third from
The consecutive-quarter decline in profitability occurred despite lenders generating record loan volumes during the last three months of 2020. The period was the third-best ever for the industry. The only two periods in which profits were higher were 2Q and 3Q 2020.
“While production profits were still incredibly strong in the fourth quarter, secondary marketing gains declined, resulting in an overall drop in production revenue,” said Marina Walsh, vice president of industry analysis at the Mortgage Bankers Association, in a press release.
Margins typically thin as refinancing booms progress and
Net secondary market income for the period was 346 basis points, or $9,655 per loan, down from 394 basis points and $10,883, respectively, in the prior quarter.
In addition, production expenses rose to $7,938 per loan from $7,452. The bulk of those expenditures came from personnel, which accounted for $4,526 of that amount. In the third quarter, average personnel expenditures totaled $5,124.
Servicing net financial income improved during the quarter, rising to a gain of $5 per loan from a loss of $30 the previous fiscal period.
