Independent
mortgage
banks
(IMBs)
and
mortgage
subsidiaries
of
chartered
banks
reported
a
pretax
net
loss
of
$645
on
each
loan
they
originated
in
the
first
quarter
of
2024
—
a
decrease
from
the
average
loss
of

$2,109
per
loan
in
Q4
2023,
according
to
the

Mortgage
Bankers
Association’s
(MBA)
newest
quarterly
performance
report.

“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,”
Marina
Walsh,
the
MBA’s
vice
president
of
industry
analysis,
said
in
a
statement.
“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.” 

Walsh
added
that,
including
both
production
and
servicing
business
lines,
59%
of
mortgage
companies
were
profitable
in
the
first
quarter.
That’s
the
highest
level
in
eight
quarters
and
up
from
a
share
of
29%
in
Q4
2023.

The
average
pretax
production
loss
was
25
basis
points
(bps)
in
the
first
quarter,
an
improvement
on
the
73-bps
loss
in
the
fourth
quarter.
It
was
also
substantially
better
than
the
58-bps
loss
in
Q1
2023.

Improved
financial
performance
for
retail
lenders
coincides
with
a
more
stable

secondary
mortgage
market,
which
has
seen
spreads
narrow
since
they
peaked
in
fall
of
2023.
Housing
inventory
has
also

climbed
from
the
low
poitns
of
last
year,
although
it
remains
well
below
pre-pandemic
levels.

The
average
production
volume
was
$384
million
per
company
in
the
first
quarter,
up
from
$359
million
per
company
in
the
fourth
quarter,
MBA
reported.
The
average
company
produced
1,193
loans
in
the
first
quarter,
up
from
1,170
loans
in
the
fourth
quarter.

Walsh’s
analysis
found
that
total
production
revenue
increased
to
371
bps
in
the
first
quarter,
up
from
334
bps
in
the
fourth
quarter.
On
a
per-loan
basis,
production
revenues
increased
to
$11,947
per
loan
in
Q1,
up
from
$10,376
in
Q4
2023.

Other
production
statistics
of
note:

• The
  average
  loan
  balance
  for
  first
  mortgages
  increased
  to
  $345,761
  in
  the
  first
  quarter,
  up
  from
  $336,757
  in
  the
  fourth
  quarter.
  
• Total
  loan
  production
  expenses
  —
  including
  commissions,
  compensation,
  occupancy,
  equipment
  and
  corporate
  allocations
  —
  decreased
  to
  395
  bps
  in
  Q1
  2024,
  down
  from
  407
  basis
  points
  in
  Q4
  2023.
  But
  per-loan
  costs
  increased
  to
  $12,593
  in
  Q1,
  up
  from
  $12,485
  in
  Q4.
  From
  the
  first
  quarter
  of
  2008
  through
  Q1
  2024,
  loan
  production
  expenses
  have
  averaged
  $7,472
  per
  loan.
  
• Median
  productivity
  —
  measured
  by
  loans
  closed
  per
  retail
  or
  consumer-direct
  production
  employee
  —
  remained
  unchanged
  at
  1.1
  loans
  per
  employee
  in
  the
  first
  quarter.
  
• Servicing
  net
  financial
  income
  for
  the
  first
  quarter
  (on
  a
  non-annualized
  basis)
  was
  $82
  per
  loan,
  up
  from
  a
  loss
  of
  $24
  per
  loan
  in
  the
  fourth
  quarter.
  Servicing
  operating
  income
  —
  which
  excludes
  mortgage
  servicing
  rights
  (MSR)
  amortization,
  gains
  and
  losses
  in
  the
  valuation
  of
  servicing
  rights
  net
  of
  hedging
  gains
  and
  losses,
  and
  gains
  and
  losses
  on
  the
  bulk
  sale
  of
  MSRs
  —
  was
  $93
  per
  loan
  in
  the
  first
  quarter,
  down
  from
  $108
  per
  loan
  in
  the
  fourth
  quarter.

The
MBA
on
Monday
released
its

latest
forecast
for
the
remainder
of
2024.
Chief
economist
Mike
Fratantoni
expects
$1.8
trillion
in
origination
volume
this
year,
with

mortgage
rates
expected
to
end
the
year
at
6.5%.

Fratantoni
expects
a
major
rebound
for
the
mortgage
market
over
the
next
two
years.
His
forecast
calls
for
$2
trillion
in
origination
volume
in
2025
and
$2.28
trillion
in
2026.
Mortgage
rates
should
fall
to
5.9%
in
2025
and
5.7%
in
2026,
according
to
Fratantoni’s
forecast.

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