As per the Mortgage Bankers Association, during the fourth quarter of 2022, Independent Mortgage Banks (IMBs) and other mortgage subsidiaries of chartered banks experienced a net loss on every mortgage origination, with a reported loss of $2,812 per loan. However, this represents a decrease of $624 from the previous quarter.
MBA’s VP of Industry Analysis, Marina Walsh, CMB, pointed out that the average loan balances decreased by 4%, indicating a slowdown in home-price growth. MBA’s latest forecast predicts an increase in total industry volume in the second quarter, along with a decrease in the 30-year fixed mortgage rate over the course of the year.
The MBA’s Quarterly Mortgage Bankers Performance Report for the fourth quarter of 2022 highlights the following key findings:
- In the fourth quarter of 2022, the average pre-tax production loss was 99 basis points (bps), which represents a decrease from the previous quarter’s average net production loss of 20 bps and a significant decline from a gain of 38 basis points recorded one year prior. It’s worth highlighting that the average pre-tax production profit on a quarterly basis, spanning the last 13 years from Q3 2008 to date, has been 50 basis points.
- In the fourth quarter, the average production volume per company was $436 million, which represents a decrease from $578 million recorded in the third quarter. Additionally, the volume per company by count averaged 1,395 loans in the fourth quarter, which is lower than the 1,819 loans reported in the previous quarter.
- In the fourth quarter, the overall revenue generated from production, which encompasses fee income, net secondary marketing income, and warehouse spread, decreased to 317 basis points, down from 326 basis points in the third quarter. Moreover, production revenues declined to $9,637 per loan in the fourth quarter on a per-loan basis, which is a drop from $10,392 per loan recorded in the previous quarter.
- In the fourth quarter, the purchase share of total originations by dollar volume increased to a record high of 88%, up from 86% in the previous quarter. MBA estimates that for the entire mortgage industry, the purchase share was 83% in the fourth quarter.