2021 Profits Plummet; Lenders Still Had a Very Good Year

While still healthy, mortgage lenders’ 2021 profits took a deep dive from the record returns recorded in 2020. The Mortgage Bankers Association’s (MBA’s) Annual Mortgage Bankers Performance Report says independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $2,339 on each loan they originated in 2021, down from $4,202 per loan the prior year. The average production profit (net production income) was 82 bps (bps) last year, compared to 157 bps in 2020. Since the inception of MBA’s report in 2008, net production income by year has averaged 60 bps ($1,456 per loan). Total loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – increased to $8,664 per loan in 2021, up from $7,578 in 2020. Personnel expenses increased to an average of $5,971 from $5,272 in 2020. “2021 was another stellar year for independent mortgage bankers, with production profits well above average but down 75 bps from the record-setting 2020,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “Performance in the second half of 2021 declined relative to the first half of the year, which is an indication of where market conditions are heading in 2022 in an environment of high expenses, rising mortgage rates, and lower refinance originations.” The report notes that, among companies that submitted data in both the first and second half of the year, the average production profit was 100 bps in the first half, compared to 62 bps in the second half.