Independent mortgage banks lose $82 per loan in second quarter

The traditional spring housing heat-up didn’t reap the usual rewards this year for independent mortgage banks (IMBs), which saw a net loss of $82 on each loan they originated during second-quarter 2022.

That’s according to the quarterly Mortgage Bankers Performance Report from the Mortgage Bankers Association (MBA), which revealed that Q2 2022 returns for IMBs and mortgage subsidiaries of chartered banks were down from a net gain of $223 per loan in the same quarter last year.

Profits were harder to come by for IMBs in the second quarter, compared to the halcyon days of the past two years. Taking all business lines (both production and servicing) into account, only 57% of the firms in the MBA’s study realized pretax net financial profits in the second quarter, down from 72% in the first quarter.

“The second quarter of 2022 did not yield the usual spring seasonal pick-up in purchase activity, in an environment of higher mortgage rates, low housing inventory and affordability challenges,” said Marina Walsh, the MBA’s vice president of industry analysis. “Pulling out a profit in these difficult conditions is no easy feat.”

Average production volume was $705 million per company in Q2, a nearly 13% drop from the prior quarter . By loan count, companies in the MBA’s study averaged 2,139 loans in the second quarter, down from 2,587 loans in Q1 2022.

Along with lower volumes were lower revenues and higher costs on the production side. Total second-quarter production revenue fell to 335 basis points (bps), down from 350 bps in the previous quarter. Per loan production revenues backtracked to $10,855, down slightly from $10,861 in Q1 2022.

Total loan production expenses, on the other hand, rose to $10,937 per loan — an all-time high in the MBA’s study — which was up from $10,637 per loan in the previous quarter. For historical context, production expenses have averaged $6,902 per loan from Q3 2008 through Q2 2022.


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