Independent Mortgage Bank (IMB) and Chartered Bank’s mortgage subsidiary reported a net loss of $82 on each loan initiated in the second quarter. That’s a significant drop from the first quarter, when lenders saw profits of $223 per loan. Mortgage Bankers Association (MBA). MBA attributes the losses to the rising interest rate environment and low housing inventory.
“The second quarter of 2022 did not see a typical spring-like seasonal recovery in buying activity in an environment of high mortgage rates, low home inventory and affordability challenges.” said Marina Walsh, vice president of industry analysis for the industry.
June saw the biggest single month increase in sales inventory in 12 months and a record low price increase, but it wasn’t enough to stop the cooling in the housing market. Black Knight.
With lower volumes and revenues and higher costs compared to the first quarter, the IMB and Chartered Bank mortgage subsidiaries have posted average pre-tax net production per loan since the fourth quarter of 2018, Walsh said. Minimize profits.
Average pre-tax production loss in Q2 2022 was 5 bps, below average net production. profit Q1 2022 was 5 bps. Compared to the same period last year, it was down from the gain of 73 bps.
For reference, the quarterly average pre-tax production profit from Q3 2008 to Q2 2022 is 54 bps.
IMB average production volume in the second quarter was $705 million, down from $808 million in the prior quarter.
IMB gross production income, which includes fee income, net secondary marking income and warehouse spreads, decreased to 335 bps in the second quarter from 350 bps in the previous quarter. Revenue per loan decreased slightly from $10,861 per loan in the first quarter to $10,855 per loan in the second quarter.
Average first mortgage loan balances peaked at $337,130 in the second quarter, up from $324,368 last quarter.
With mortgage rates up about 2% year-to-date, the share of total origination purchases due to a stronger dollar between the IMB and Chartered Bank mortgage subsidiaries jumped to 81% from 63% the previous quarter . MBA estimates that mortgage purchases are his 70% of total industry loans in the same period.
Non-annualized second quarter services net financial revenues of $133 per loan decreased from $242 per loan in the first quarter.
Although the sale of MSRs does not directly impact revenue as a revenue stream, the conversion of MSRs into cash through the sale transaction enhances cash flow and overall liquidity for lenders.
Excluding MSR amortization, gains or losses on the valuation of servicing rights, hedging gains or losses, and gains or losses on the bulk sale of MSRs, servicing operating income was $97 per loan in the second quarter, Up from $94 per loan for the quarter. First quarter.
“Only 57% of companies were profitable in both production and services combined,” says Walsh.
Of the 347 companies that reported production data for Q2 2022, 84% were IMBs and the remaining 16% were subsidiaries and other non-depository institutions.