According to the Mortgage Bankers Association's newly released Quarterly Mortgage Bankers Performance Report, independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a net loss of $82 on each loan they originated in the second quarter of 2022, down from a reported gain of $223 per loan in the first quarter of 2022.

"The second quarter of 2022 did not yield the usual Spring seasonal pick-up in purchase activity, in an environment of higher mortgage rates, low housing inventory, and affordability challenges," said Marina Walsh, CMB, MBA's Vice President of Industry Analysis. "With lower volume, lower revenues, and higher costs relative to the first quarter, the average pre-tax net production income per loan reached its lowest level since the fourth quarter of 2018."

Added Walsh, "Combining both production and servicing operations, only 57 percent of the companies in our report were profitable. Pulling out a profit in these difficult conditions is no easy feat."

Key findings of MBA's Q2 Mortgage Bankers Performance Report:

• The average pre-tax production loss was 5 bps in the second quarter of 2022, down from an average net production profit of 5 bps in the first quarter of 2022, and down from 73 basis points in the second quarter of 2021. The only other quarters in the survey's history to record net production losses were: first quarter of 2014 (8 basis points); first quarter of 2018 (8 basis points), and the fourth quarter of 2018 (11 basis points).The average quarterly pre-tax production profit, from the third quarter of 2008 to the most recent quarter, is 54 basis points.
• Average production volume was $705 million per company in the second quarter, down from $808 million per company in the first quarter. The volume by count per company averaged 2,139 loans in the second quarter, down from 2,587 loans in the first quarter.
• Total production revenue (fee income, net secondary marketing income and warehouse spread) decreased to 335 bps in the second quarter, down from 350 bps in the first quarter. On a per-loan basis, production revenues decreased to $10,855 per loan in the second quarter, down from $10,861 per loan in the first quarter.
• Net secondary marketing income decreased to 243 bps in the second quarter, down from 270 bps in the first quarter. On a per-loan basis, net secondary marketing income decreased to $7,939 per loan in the second quarter from $8,429 per loan in the first quarter.
• The purchase share of total originations, by dollar volume, increased to 81 percent in the second quarter from 63 percent in the first quarter. For the mortgage industry as a whole, MBA estimates the purchase share was at 70 percent in the second quarter of 2022.
• The average loan balance for first mortgages increased to a new study high of $337,130 in the second quarter, up from $324,368 in the second quarter.
• The average pull-through rate (loan closings to applications) increased to 75 percent in the second quarter, up from 73 percent in the first quarter.
• Total loan production expenses - commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations - increased to a study-high of $10,937 per loan in the second quarter, up from $10,637 per loan in the first quarter of 2022. From the third quarter of 2008 to last quarter, loan production expenses have averaged $6,902 per loan.
• Personnel expenses averaged $7,371 per loan in the second quarter, up from $7,113 per loan in the first quarter.
• Productivity decreased to 1.7 loans originated per production employee per month in the second quarter from 1.8 loans per production employee per month in the first quarter. Production employees include sales, fulfillment, and production support functions.
• Servicing net financial income for the second quarter (without annualizing) was at $133 per loan, down from $242 per loan in the first quarter. Servicing operating income, which excludes MSR amortization, gains/loss in the valuation of servicing rights net of hedging gains/losses and gains/losses on the bulk sale of MSRs, was $97 per loan in the second quarter, up from $94 per loan in the first quarter.
• Including all business lines (both production and servicing), 57 percent of the firms in the study posted pre-tax net financial profits in the second quarter, down from 72 percent in the first quarter.