Independent mortgage banks and mortgage subsidiaries of chartered banks reported a pre-tax net loss of $645 on each loan they originated during the first quarter, according to data from the Mortgage Bankers Association (MBA). This represents a decline from the reported loss of $2,109 per loan in the fourth quarter of 2023.
More than half (59%) of the companies surveyed by the MBA posted pre-tax net financial profits in the first quarter, up from 29% in the previous quarter. The average pre-tax production loss was 25 basis points (bps) in the first quarter, compared to an average net production loss of 73 bps in the fourth quarter and a loss of 68 basis points one year ago.
The average production volume was $384 million per company in the first quarter, up from $359 million per company in the fourth quarter. The volume by count per company averaged 1,193 loans in the first quarter, up from 1,170 loans in the fourth quarter.
Total production revenue (fee income, net secondary marketing income and warehouse spread) increased to 371 bps in the first quarter, up from 334 bps in the fourth quarter. Average quarterly production revenue, from the third quarter of 2008 to the most recent quarter, is 347 basis points.
“While the first quarter of 2024 marks the eighth consecutive quarter of net production losses, these losses were less severe than the previous two quarters,” said Marina Walsh, MBA’s vice president of industry analysis. “In basis points, production revenue rose above the historical average and production costs declined. This led to an improvement in the production bottom line by almost 50 basis points during the quarter. Servicing profitability also improved, given low prepayment activity and preservation of servicing values. Including both the production and servicing business lines, close to 60% of mortgage companies were profitable in the first quarter of this year – the highest level in eight quarters.”
;
