IMBs post per-loan profit rebound during third quarter

Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks saw a net gain of $2,594 for each loan they originated in third-quarter 2021, according to the Mortgage Bankers Association (MBA).

That’s up from $2,023 per loan during the second quarter of this year as IMBs realized a modest per-loan profit recovery after a Q2 backtrack. Profits, however, remain down by more than 50% compared last year’s record figures, as origination activity per company was down in Q3 2021. Companies averaged 3,889 loans during this three-month period, compared to 4,615 in the second quarter. This translated to an average production volume of $1.17 billion per company, down from $1.35 billion in Q2.

Lenders, however, continue to see healthy profit margins. Combining both production and servicing operations, 92% of firms were profitable in the third quarter, up from 84% in the prior quarter.

Production revenue was the “difference-maker” for the per-loan rebound in Q3, said Marina Walsh, the MBA’s vice president of industry analysis. Total production revenue grew to 396 basis points (bps), up from 375 bps in the second quarter. On a per-loan basis, this translated to $11,734, up from $10,691 in the previous quarter.

This revenue jump was somewhat offset, however, by a rise in production expenses. These figures reached an average of $9,140 per loan in Q3, up from $8,668 in Q2.

“Per-loan production expenses continued to rise for the fifth consecutive quarter, reaching the second-highest level ever reported,” Walsh said. “Rising sales costs that are often determined based on a percentage of loan balances was one primary factor for the increase in expenses.”

Walsh also noted that the average loan balance for first mortgages reached $308,000 in the third quarter, surpassing the $300,000 threshold for the first time ever to reach an all-time high for the MBA’s study.


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