Association study highlights mortgage industry woes
How bad have things been for the mortgage-lending industry? The business’ leading trade association reports that mortgage banking firms actually lost money in 2006 on the average mortgage loan they produced.
The 2007 cost study released this October by the Mortgage Bankers Association reports that mortgage-banking production profits fell to negative-$50 per loan made in 2006. Yes, that’s right, negative-$50. That’s down from a production profit of $258 per loan in 2005.
The biggest reason, according to the association, is that production operating expenses grew by a whopping 17 percent in 2006. It cost mortgage bankers an average of $3,416 for each loan they made last year.
The study’s bad news also includes the following tidbits:
n Overall, the average mortgage-banking firm posted a pre-tax net financial income of $6.4 million in 2006. That’s down from an average of $26 million in 2005.
n Mortgage loan officers averaged 62 loans each in 2006, compared to 83 in 2005.
n The net cost to originate each loan increased to $2,476 in 2006 compared to $2,049 one year earlier.
Tags: loan-production-down, MBA, mortgage-industry, mortgage-profits-downRelated Stories
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