Non-bank profit margins improve, but spending increases

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Non-bank mortgage lenders recovered in the third quarter, increasing their net income 28% to $ 2,594 on every loan issued, according to a quarterly report released by the Mortgage Bankers Association Tuesday. But they would be wise to look at spending, which reached the second highest rate of recorded history.

The results follow a turbulent second quarter, during which the lenders were concerned while the net profit and margins of gain on sale collapsed. The trade association found that from April to June 30, the reported net gain for non-bank lenders was $ 2,023, down from a reported gain of $ 3,361 per loan in the first quarter of 2021.

The reason for the rebound in the third quarter was related to production revenues, which rose more than 20 basis points from the previous quarter, said Marina Walsh, vice president of industry analysis at the MBA.

Total production revenue in the third quarter was 396 basis points, compared to 375 basis points in the second quarter. However, despite the increase, Walsh noted that compared to a year ago, production revenue was nearly 80 basis points behind in the third quarter.

On a per-loan production revenues reached $ 11 734 per loan in the third quarter, against $ 10,691 per loan in the previous quarter, the report said.


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Overall, 92% of non-bank lenders who participated in the MBA survey showed an overall profitability in the third quarter, against 84% in the second. A total of 365 companies participated in the survey.

Meanwhile, the average production volume fell in the third quarter to $ 1.17 billion per non-bank lender, from $ 1.35 billion in the second quarter. This corresponds to a drop in the number of loans issued, from an average of 4,615 in the second quarter to 3,889 in the third quarter, according to the survey findings.

The trade group also noted that total loan production expenses and personnel expenses jumped in the third quarter, averaging $ 9,140 and $ 6,185 per loan, respectively.

“Production spending per loan continued to increase for the fifth consecutive quarter, reaching the second highest level on record. One of the main factors behind the increase in expenses has been the increase in selling costs, which are often determined as a percentage of loan balances, ”said Walsh. “The average first mortgage balance hit a new high in the third quarter, for the first time surpassing the $ 300,000 threshold to over $ 308,000.”

The productivity of issued loans also declined, production employees who obtained an average of 3.6 loans per month in the third quarter, against 3.7 loans in the second quarter.

Another trend highlighted in the report is that the share of purchases in total assemblies continued to grow steadily, reaching 59% in the third quarter from 57% in the second, the trade group said.

The MBA estimates that for the mortgage industry as a whole, the share of purchases was 46% in the third quarter, compared to 44% in the previous quarter.

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