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Mortgage Profits Decline but Remain Close to Record Levels
Wednesday, March 24, 2021
Mortgage originators' profits remained strong in the fourth
quarter of 2020, although they were down considerably from the previous period.
The Mortgage Bankers Association's (MBA's) Mortgage Bankers Performance
Report says that independent mortgage banks (IMBs) and mortgage
subsidiaries of chartered banks reported a net gain of $3,738 on each loan they
originated during the quarter. In Q3 their reported profits were $5,535 per
loan. The average pre-tax production
profit was 137 basis points (bps) on an average loan size of $287,131 (a record
high) compared to the third quarter profit of
203 basis points on an average origination balance of $282,659. In the
fourth quarter of 2019 the pre-tax profit was 46 basis points. MBA puts the average
pre-tax profit, from the third quarter of 2008 to the most recent quarter, at
53 basis points.
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