Low interest rates are driving high profits for mortgage underwriters. The Mortgage Bankers Association says profits have hit a three-year high for the second quarter of 2019 compared with 2016’s second quarter.
"Production profits in the second quarter of 2019 were the best MBA has seen since the third quarter of 2016 ($1,773 per loan), as production volume rose and expenses declined significantly," said Marina Walsh, MBA's vice president of industry analysis, said in a statement. "In fact, the drop in production expenses, by over $1,500 per loan, was the largest quarterly decline reported since the inception of this study in 2008."
According to a Houston Chronicle story, on average, the lenders surveyed -- which did not include chartered banks such as Bank of America and Wells Fargo -- produced $601 million worth of loans in the second quarter, up from $385 million the quarter before. As volume has risen, the cost-per-loan has plummeted.
For example, the story said the average employee originated 2.3 loans per month in the second quarter, up from 1.8 in the first. On a per-loan basis, the cost to lenders of commissions, compensation, rent, equipment and other production expenses fell to $7,725 in the second quarter from $9,299 in the first.
To learn more about high profits from low interest rates, click on the photo above.