As waning refinances negatively impacted overall single-family loan originations, quarterly production profits at independent home lenders sank.
Net production income at
independent mortgage banks and mortgage subsidiaries of chartered banks was 12 basis points in the fourth-quarter 2017.
Earnings plunged from 42 BPS the prior period and sank compared to the same-three months during 2016, when income worked out to 24 BPS.
That was according to the
Quarterly Mortgage Bankers Performance Report Q4 2017 from the
Mortgage Bankers Association.
The report reflects survey results from 329 home lenders, though prior-quarter comparisons were based on the 298 firms that participated in both periods’ surveys.
Production earnings ranged from a negative 1 basis point at firms with between $0.10 billion and $0.25 billion in quarterly volume to a positive 26 BPS at lenders that closed between $0.05 billion and $0.10 billion.
The quarter-over-quarter decline in earnings among all firms
reflected an increase in production expenses — to 351 BPS from 333 BPS.
In addition, revenues were lower as average loan origination fees fell to 45 BPS from 53 BPS in the third quarter. The fees were unchanged from the final quarter of 2016.
Originations fees were as low as 33 BPS at companies that funded in excess of $0.25 billion and as high as 55 BPS at lenders with less than $0.05 billion in production.
Based on origination channels, net production income was 15 BPS at retail originators, less than a basis point at
companies with both wholesale and retail channels, and a 2-basis-point loss at firms that derive at least three-quarters of their income from the wholesale channel.
Average fourth-quarter 2017 originations at the companies were 2,202 loans for $0.541 billion, off from 2,334 loans for $0.572 billion three months earlier and declining from 2,811 loans for $0.690 billion one year earlier.
Average closings per sales employee inched up to 5.9 loans per month from 5.8 loans the preceding quarter but tumbled from 8.6 loans in the final-three months of 2016.
Marina Walsh, MBA’s vice president of industry analysis, explained in a written statement that a seasonal decline in purchase volume was not offset by an increase in refinances.
“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,” Walsh said. “Production revenues per loan also dropped, despite the average loan balance reaching a study-high.”
