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Net Cost to Originate the Average Loan Rises to $5238

Mortgage profits declined in the fourth
quarter of 2014 compared to the previous quarter but soared when compared to the
fourth quarter of 2013.  Independent
mortgage banks and subsidiaries of chartered banks told the Mortgage Bankers
Association (MBA) that their average net gain on each loan they originated
during the recent period was $744 compared to $150 per loan one year earlier.  During the third quarter of 2014 the gain was
$897.  Average production profit was 32
basis points in the fourth quarter, compared to an average net production
profit of 42 bps in the third quarter and an average of 9 bps a year ago.

MBA’s Quarterly Mortgage Bankers Performance Report also noted that a year
earlier only 58 percent of companies responding to its survey reported overall
pre-tax profits during the quarter. 
Seventy-four percent reported such profits in the fourth quarter and 83
percent in the third quarter of 2014.

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