Per loan profits increased in the second quarter the Mortgage Bankers Association (MBA) said today, aided by purchase volume and loan size.  MBA's quarterly survey of independent mortgage banks and mortgage subsidiaries of chartered banks showed increased production resulted in a net gain of $1,522 on each loan originated compared to a reported gain of $1,447 per loan in the first quarter of 2015.

"Average company production volume was up in the second quarter, as purchase volume grew and mortgage pipelines from the first quarter's refinance boomlet closed," Marina Walsh, MBA's Vice President of Industry Analysis said. "The production volume increase resulted in a nominal decrease in per-loan production expenses, which offset a decrease in secondary marketing income.  However, by historical standards, production expenses remained elevated given that the average company production volume was at the highest level since inception of the study in 2008."

That production volume was $657 million per company compared to $473 million in the first quarter. Companies originated an average of 2,714 loans up from a volume of 1,917 the previous quarter and the average loan balance for first mortgages grew from $242,791 the prior quarter to a study high of $244,350.  

The average production profit was 67 basis points in the second quarter, compared to an average net production profit of 60 bps in the first quarter of 2015. Secondary marketing income was 294 basis points down from 297 basis points in the first quarter.

Total loan production expenses - commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations - decreased to $6,984 per loan from $7,195.  Personnel expenses all dipped slightly, averaging $4,632 per loan compared to $4,675 in Q1. 

The "net cost to originate" was $5,372 per loan in the second quarter of 2015, down from $5,597 in the first quarter.  The "net cost to originate" includes all production operating expenses and commissions, minus all fee income, but excludes secondary marketing gains, capitalized servicing, servicing released premiums, and warehouse interest spread.

Sixty-two percent of originations were purchase mortgages compared to 51 percent in the first quarter.  MBA estimates that the purchase share for the mortgage industry as a whole in the second quarter was 57 percent. The share of jumbo first mortgages also rose, from 8.74 percent to 9.07 percent.

Productivity increased to 2.8 loans originated per production employee per month in the second quarter of 2015, up from 2.4 loans in Q1.