The Mortgage Bankers Association (MBA) has released their Quarterly Mortgage Bankers Performance Report. The quarterly study found that firms posting pre-tax net profits declined to 76 percent during the fourth quarter of 2021 from 92 percent in third quarter 2021. Independent mortgage banks and mortgage subsidiaries of chartered banks reported a net gain of $1,099 on each loan originated in the fourth quarter of 2021. This was a 57.6 percent decline from the $2,594 per loan net gain seen in the third quarter.
“Production margins tightened substantially in the fourth quarter of 2021,” MBA’s Vice President of Industry Analysis Marina Walsh said. “After a two-year run of above-average profitability, pre-tax net production income per loan reached its lowest level since the first quarter of 2019."
Lower revenues and higher production costs are cited as the primary reasons for the decline in income.
This comes as new home sales dropped in February 2022. This was the second consecutive month to see a decline in new home sales. Sales of new single-family homes saw a decline of 6.2 percent from February 2021.
The average sale price of a new house sold in February 2022 was $511,000, an increase from January when the average was $494,000.
“Affordability is a growing challenge as higher new-home prices and rising rates may be pricing out some buyers,” First American Deputy Chief Economist Odeta Kushi said. “One year ago, 31 percent of new home sales were priced below $300,000. In February 2022, only 18 percent of new home sales were priced below $300,000.”