Overall Mortgage Production Volume Falls in Q1 2017

Banks and mortgagors made less profit in the first quarter of 2017 compared to the previous quarter of 2016. In the recent Quarterly Mortgage Bankers Performance Report by Mortgage Bankers Association, it was found out that production profitability decreased by more than half than the previous quarter.

Mortgage subsidiaries of chartered banks and independent mortgage banks had a reported net gain is $224 per loan in the first quarter of the year, way down from Q4 2016’s net gain of $575 per originated loan. Per production cost was recorded the highest since the quarterly study was established in 2008.

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Report highlights

Aside from the negative report on mortgage production volume, other highlights of the report were as follows:


Per company, the average volume of production was $455 million in Q1 2017, a decrease from 2016’s last quarter average of $690. Per count, Q1 2017’s average recorded 1,944 loans while Q4 2016’s was significantly higher with 2,811 loans.


Not only that, the profit on pre-tax production also fell to only 10 basis points in Q1 2017 compared to Q4 2016’s 24 basis points.


By dollar volume, the purchasepercentage of total mortgage originations was at 68 percent while it was only 58 percent in Q4 2016.


The report also recorded a decrease in the average loan balance. In Q4 2016, the average amount was at $246,473. Now, it is only at $242,949.


The share of loans that pulled through to closing recorded only 70 percent at the first quarter of this year, still lower than the preceding quarter’s pull-through rate of 76 percent.


The total production returns, however, increased by 395 basis points in the first quarter of the year compared to just 347 basis points a quarter prior. Taking that on a per-loan basis, returns are up at Q1 with $9,111 revenue in every loan compared to Q4’s $8,137 per loan.


The total expense of production also increased to $8,887 per loan in the first quarter of the year compared to just $7,562 in the last quarter of the previous year.


The personnel expense for Q1 concluded at $5,802 in average, an increase from last year’s last quarter record of only $5,001 per loan.


Employee productivity decreased with the average production employee only making 1.7 loan originations every month. In Q4 2016, the average productivity was 2.7 loans per employee per month.


And, inclusive of all business lines, only 67 percent of all firms surveyed reported pre-tax financial profits in Q1, also a decrease from Q4’s 73 percent.


For more information about the report, you can visit the MBA website to purchase a copy of the performance data.

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