MBA: 2019 IMB Production Volumes, Profits Rise

Independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $1,470 on each loan they originated in 2019, up from $367 per loan in 2018, the Mortgage Bankers Association reported Friday in its Annual Mortgage Bankers Performance Report.

Marina Walsh

“2019 was a much improved mortgage market compared to the very challenging environment for the industry in 2018,” said Marina Walsh, MBA Vice President of Industry Analysis. “After an unfavorable first quarter, independent mortgage companies saw significant improvement in profitability starting in the second quarter, driven by a jump in refinancing activity from the steady decline in mortgage rates. As volume escalated, production costs dropped from 2018 levels by $743 per loan.”

Walsh noted for companies holding mortgage servicing rights, one downside was that prepayment activity triggered heavy MSR amortization and write-downs. “These write-downs were particularly painful for servicers that did not hedge their MSRs,” she said.

Walsh said profits on the production side of the business generally compensated for servicing losses. Including both production and servicing operations, 92 percent of the firms posted pre-tax net financial profits in 2019, compared to only 69 percent of firms in 2018.

“For many IMBs, 2019 is now a distant memory because of the mortgage market disruption caused by the ongoing COVID-19 pandemic,” Walsh said. “The many pain points right now for IMBs include liquidity constraints, volatility in the secondary markets, capacity issues from heightened refinance activity, mortgage origination obstacles due to social distancing, and escalating forbearance activity. All of these challenges could factor into the future profitability of many IMBs.”

Other key report findings:

  • Average production volume rose $2.7 billion (10,411 loans) per company in 2019, up from $2.0 billion (8,171 loans) per company in 2018. On a repeater company basis, average production volume grew to $2.94 billion (11,227 loans) in 2019, up from $2.14 billion (8,805 loans) in 2018. For the mortgage industry as whole, MBA estimated production volume at $2.17 trillion in 2019, up from $1.68 trillion in 2018.
  • In basis points, average production profit (net production income) rose to 58 bps in 2019, compared to 14 bps in 2018. In the first half of 2019, net production income averaged 46 bps, then rose to 64 bps in the second half. Since the inception of MBA’s Annual Performance Report in 2008, net production income by year has averaged 50 bps ($1,057 per loan).
  • The refinance share of total originations (by dollar volume) increased to 34 percent in 2019 from 20 percent in 2018. For the mortgage industry as a whole, MBA estimated the refinancing share last year increased to 41 percent from 28 percent in 2018.
  • Average loan balance for first mortgages reached a study-high of $266,533 in 2019, up from $251,084 in 2018. This is the 10th consecutive year of rising loan balances on first mortgages.
  • Total production revenues (fee income, net secondary marking income and warehouse spread) fell to 356 bps in 2019, down from 362 bps in 2018. On a per-loan basis, production revenues rose to $9,004 per loan in 2019, up from $8,645 per loan in 2018.
  • Total loan production expenses – commissions, compensation, occupancy, equipment and other production expenses and corporate allocations – fell to $7,535 per loan in 2019, down from $8,278 in 2018. 
  • Personnel expenses averaged $5,094 per loan in 2019, down from $5,524 per loan in 2018.
  • Productivity grew to 2.3 loans originated per production employee per month in 2019, up from 1.8 in 2018. Production employees include sales, fulfillment and production support functions.
  • Net servicing financial income, which includes net servicing operational income, as well as MSR amortization and gains and losses on MSR valuations, fell to $116 per loan in 2019, down from $203 per loan in 2018.
  • Including all business lines, 92 percent of the firms in the study posted pre-tax net financial profits in 2019, up from 69 percent in 2018. In the first half of 2019, 85 percent of reporting repeater firms posted pre-tax financial profits, compared to 93 percent in the second half.

The MBA Mortgage Bankers Performance Report series offers a variety of performance measures on the mortgage banking industry and is intended as a financial and operational benchmark for independent mortgage companies, subsidiaries and other non-depository institutions. Of the 271 firms that reported production, 80 percent were independent mortgage companies; the remaining 20 percent were subsidiaries and other non-depository institutions.

MBA produces five performance report publications per year: four quarterly reports and one annual report. To purchase or subscribe to the publications, visit