MBA Chart of the Week: Third-Quarter Pre-Tax Net Production Income by Percentile
Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a simple average pre-tax net profit of 18 basis points, or $701 on each loan they originated in the third quarter of 2024, according to the Mortgage Bankers Association’s (MBA) newly released Quarterly Mortgage Bankers Performance Report. This marks the second consecutive quarter of average production profits, after eight straight quarters of average net production losses.
In this week’s MBA Chart of the Week, we look at year-over-year third-quarter production profits since 2018 broken out by 25th, 50th and 75th percentiles, with approximately 350 mortgage companies reporting each quarter. The third quarter of 2024 showed companies at both the median and 75th percentiles reporting net production profits for the first time since 2021, when almost all companies were profitable. The median net production income a year ago, in the third quarter of 2023, was a loss of 24 basis points compared to a gain of 18 basis points in the third quarter of 2024. All percentiles for the third quarter of 2024 were similar to 2018 figures.
For companies interested in a deeper dive into the components of net production income including revenue, expense, productivity and more, consider joining the MBA and STRATMOR Peer Group Roundtable program (PGR). Groups are being formed now and space is limited so please reach out to Marina Walsh if you are interested in joining.
Definitional Note: Pre-tax net production income in basis points is defined as total revenues (fee income, secondary marketing income, value of capitalized servicing/servicing released premiums at origination and net warehouse spread) minus fully-loaded production costs (sales, fulfillment, production support and corporate costs), divided by production volume in dollars ($), multiplied by 10,000.
– Jenny Masoud (jmasoud@mba.org); Marina Walsh, CMB (mwalsh@mba.org)
