A decrease in overall volume and an increase in production expenses drove the decline
Production profitability among independent mortgage banks and mortgage subsidiaries of chartered banks dropped in the fourth quarter from the third quarter as overall volume decreased and production expenses grew, according to the Quarterly Mortgage Bankers Performance Report released by the Mortgage Bankers Association (MBA).
For each loan originated during the quarter, the net gain was $237, down from the $929 net gain per loan in the third quarter.
"Production profits plummeted in the fourth quarter of 2017 compared to the third quarter of 2017," MBA Vice President of Industry Analysis Marina Walsh said. "Purchase volume was lower in the fourth quarter, in part due to normal seasonality. At the same time, there was no substantial pickup in refinancings. While cash-out refinancings grew incrementally to 16% of overall production volume in the fourth quarter, from 14% the previous quarter, rate-term refinancings continued to be less than 13% of overall production volume, on par with the previous two quarters."
"The end result was lower overall volume and production expenses that grew to $8,475 per loan – the second highest level reported since the inception of our study in 2008. Production revenues per loan also dropped, despite the average loan balance reaching a study-high," Walsh said.
The report found that the average production volume per company during the quarter was $505 million, down from $569 million per company in the previous quarter. Additionally, the volume by count per company average declined quarter over quarter to 2,059 loans from 2,341 loans. Fourth-quarter personnel expenses averaged $5,560 per loan, up from $5,279 per loan in the third quarter.
