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Delinquencies Rise In The Second Quarter

The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 4.53 percent of all loans outstanding at the end of the second quarter of 2019, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The foreclosure inventory rate, the percentage of loans in the foreclosure process, was 0.90 percent last quarter – the lowest since the fourth quarter of 1995.  


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The delinquency rate was up 11 basis points from the first quarter of 2019 and 17 basis points from one year ago. The percentage of loans on which foreclosure actions were started in the second quarter rose by two basis points to 0.25 percent.


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“The unemployment rate remains quite low, but the national mortgage delinquency rate in the second quarter rose from both the first quarter and one year ago. The economy is slowing, and this poses the risk of further increases in delinquency rates,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “Across loan types, the FHA delinquency rate posted the largest variance, increasing 29 basis points from last quarter and 52 basis points from a year ago.”


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Added Walsh, “Heavy rains and flooding, extreme heat, and tornadoes in certain states during the spring, may have also contributed to the increase in the delinquency rate, as some borrowers likely faced disruption or hardship.”


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Key findings of MBA’s Second Quarter of 2019 National Delinquency Survey:

  • Compared to last quarter, the seasonally adjusted mortgage delinquency rate increased for all loans outstanding. By stage, the 30-day delinquency rate increased four basis points to 2.62 percent, the 60-day delinquency rate remained unchanged at 0.81 percent, and the 90-day delinquency bucket increased seven basis points to 1.10 percent. 
  • By loan type, the total delinquency rate for conventional loans increased 15 basis points to 3.61 percent over the previous quarter. The FHA delinquency rate increased 29 basis points to 9.22 percent, while the VA delinquency rate decreased by 13 basis points to 4.24 percent over the previous quarter. 
  • On a year-over-year basis, total mortgage delinquencies increased for all loans outstanding. The delinquency rate increased by 16 basis points for conventional loans, increased 52 basis points for FHA loans, and increased 27 basis points for VA loans from the previous year.
  • The delinquency rate includes loans that are at least one payment past due, but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the second quarter was 0.90 percent, down two basis points from the first quarter of 2019 and 15 basis points lower than one year ago. This is the lowest foreclosure inventory rate since the fourth quarter of 1995.
  • The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was at 1.95 percent – a decrease of 1 basis point from last quarter and a decrease of 35 basis points from last year. The serious delinquency rate was unchanged for conventional loans, down 2 basis points for FHA loans, and down 6 basis points for VA loans from the previous quarter. Compared to a year ago, the serious delinquency rate decreased by 35 basis points for conventional loans, 43 basis points for FHA loans and 22 basis points for VA loans.
  • The five states with the largest increases in their overall delinquency rate were affected by weather-related issues. This may have resulted in an increase in delinquencies over the previous quarter of the following magnitude: West Virginia (86 basis points), Mississippi (81 basis points), Alabama (73 basis points), Indiana (73 basis points), and New Mexico (65 basis points).

Mortgage Applications Increase In Latest MBA Weekly Survey

Mortgage applications increased 5.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 2, 2019.


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The Market Composite Index, a measure of mortgage loan application volume, increased 5.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 5 percent compared with the previous week. The Refinance Index increased 12 percent from the previous week and was 116 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 7 percent higher than the same week one year ago.


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“The Federal Reserve cut rates as expected last week, but the bigger influence on the financial markets was the beginning of a trade war with China. The result was a sharp drop in mortgage rates, which will likely draw many refinance borrowers into the market in the coming weeks,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “The 30-year fixed rate mortgage fell to its lowest level since November 2016, and the drop resulted in an almost 12 percent increase in refinance application volume, bringing the index to a reading over 2,000 – its highest over the same time period. We fully expect that refinance volume will jump even higher this week given the further drop in rates.”


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Added Fratantoni, “Lower mortgage rates did not pull more homebuyers into the market, as purchase volume slipped a bit last week, but still remains around 7 percent ahead of last year’s pace.”

The refinance share of mortgage activity increased to 53.9 percent of total applications from 50.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 4.7 percent of total applications.


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The FHA share of total applications decreased to 11.0 percent from 11.3 percent the week prior. The VA share of total applications increased to 12.8 percent from 12.6 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.01 percent from 4.08 percent, with points increasing to 0.37 from 0.34 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) decreased to 3.96 percent from 4.04 percent, with points increasing to 0.26 from 0.22 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.86 percent from 3.94 percent, with points increasing to 0.38 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.37 percent from 3.48 percent, with points increasing to 0.37 from 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.36 percent from 3.52 percent, with points increasing to 0.36 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

June New Home Purchase Mortgage Applications Increased 17.9% Year Over Year

The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for June 2019 shows mortgage applications for new home purchases increased 17.9 percent compared from a year ago. Compared to May 2019, applications decreased by 14 percent. This change does not include any adjustment for typical seasonal patterns.


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“Ongoing concerns about economic growth and trade policy likely kept some potential buyers out of the market despite lower mortgage rates,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Our seasonally adjusted estimate of new home sales was down in June after two of the strongest months in the survey’s history dating back to 2013, but remained higher than a year ago. The average loan amount for new home purchase applications fell slightly to its lowest level since November 2018, as home price growth continued to slow in many markets and purchase transactions have shifted away from the higher end of the price spectrum.”


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MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 646,000 units in June 2019, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.


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The seasonally adjusted estimate for June is a decrease of 11.1 percent from the May pace of 727,000 units. On an unadjusted basis, MBA estimates that there were 58,000 new home sales in June 2019, a decrease of 15.9 percent from 69,000 new home sales in May.


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By product type, conventional loans composed 68.7 percent of loan applications, FHA loans composed 18.0 percent, RHS/USDA loans composed 0.6 percent and VA loans composed 12.7 percent. The average loan size of new homes decreased from $330,311 in May to $329,593 in June.

MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro level. This data also provides information regarding the types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.

Mortgage Credit Availability Increased In June

Mortgage credit availability increased in June according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) that analyzes data from Ellie Mae’s AllRegs Market Clarity business information tool.


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The MCAI rose 0.2 percent to 189.8 in June. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. The Conventional MCAI increased 0.3 percent, while the Government MCAI decreased slightly (0.1 percent). Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 0.6 percent, and the Conforming MCAI fell by 0.1 percent.


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“Overall credit availability increased only slightly in June over May’s levels. Jumbo credit availability increased for the sixth month in a row and is at its highest level since 2011, when the survey began,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Credit availability has generally increased in 2019 as lenders have worked to meet affordability challenges.  Because mortgage rates have recently fallen and home price growth has decelerated in many markets, credit availability may stabilize at its current levels.” 

CONVENTIONAL, GOVERNMENT, CONFORMING, AND JUMBO MCAI COMPONENT INDICES

The MCAI rose 0.2 percent to 189.8 in June. The Conventional MCAI increased 0.3 percent, while the Government MCAI decreased slightly (0.1 percent). Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 0.6 percent, and the Conforming MCAI fell by 0.1 percent. 


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The Conventional, Government, Conforming, and Jumbo MCAIs are constructed using the same methodology as the Total MCAI and are designed to show relative credit risk/availability for their respective index. The primary difference between the total MCAI and the Component Indices are the population of loan programs which they examine. The Government MCAI examines FHA/VA/USDA loan programs, while the Conventional MCAI examines non-government loan programs. The Jumbo and Conforming MCAIs are a subset of the conventional MCAI and do not include FHA, VA, or USDA loan offerings. The Jumbo MCAI examines conventional programs outside conforming loan limits, while the Conforming MCAI examines conventional loan programs that fall under conforming loan limits.


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The Conforming and Jumbo indices have the same “base levels” as the Total MCAI (March 2012=100), while the Conventional and Government indices have adjusted “base levels” in March 2012. MBA calibrated the Conventional and Government indices to better represent where each index might fall in March 2012 (the “base period”) relative to the Total=100 benchmark.

EXPANDED HISTORICAL SERIES

The Total MCAI has an expanded historical series that gives perspective on credit availability going back approximately 10-years (expanded historical series does not include Conventional, Government, Conforming, or Jumbo MCAI). The expanded historical series covers 2004 through 2010, and was created to provide historical context to the current series by showing how credit availability has changed over the last 10 years – including the housing crisis and ensuing recession. Data prior to March 31, 2011, was generated using less frequent and less complete data measured at 6-month intervals and interpolated in the months between for charting purposes. Methodology on the expanded historical series from 2004 to 2010 has not been updated.

MBA Expands Path To Diversity Scholarship

The Mortgage Bankers Association (MBA) announced that scholarships awarded under its popular Path to Diversity (P2D) Scholarship Program can now also be used towards six upcoming MBA conferences where attendees can obtain Continuing Professional Education (CPE), Continuing Legal Education (CLE) or Society of Human Resource Management (SHRM) credits. The scholarships were previously only available for courses offered by MBA Education.


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“The Path to Diversity Scholarship Program was created to celebrate our industry’s diverse workforce and recognize those professionals who are seeking to advance their careers through the many real estate finance courses and certificates offered by MBA,” said Lisa J. Haynes, Chief Financial and Diversity and Inclusion Officer of the Mortgage Bankers Association. “Expanding the usage of the scholarships creates new opportunities for industry professionals to participate at our conferences.”


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P2D scholarship awardees can now use their voucher of up to $2,000 to cover registration fees at conferences that have sessions or tracks eligible for CPE, CLE or SHRM credits. The full list of upcoming MBA conferences are:


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Human Resource Symposium (SHRM) – September 11 – 12, 2019

Regulatory Compliance Conference (CLE) – September 22 – 24, 2019

Accounting and Financial Management Conference (CPE) – November 19 – 21, 2019


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National Mortgage Servicing Conference & Expo (CLE) – February 23 – 26, 2020

Legal Issues and Regulatory Compliance Conference (CLE) – May 3 – 6, 2020

Commercial/Multifamily Servicing & Technology Conference (CPE) – May 17 – 20, 2020

Under the new expansion, awardees can choose to cover course registration fees, up to a maximum of $2,000, at the aforementioned upcoming conferences, or can continue to use it towards MBA Education programs and courses. To be eligible for the P2D scholarship, applicants must be currently employed by an MBA member firm or state MBA member firm, and have two years of experience in the mortgage industry, or some equivalent in real estate finance experience or training. Applicants can be awarded the scholarship once per calendar year and up to three times in their career.

To view the eligibility requirements for MBA Education courses and conferences or to apply, visit here MBA members can visit here to donate to the P2D scholarship fund.

Commercial And Multifamily Mortgage Delinquencies Remain Low

Commercial and multifamily mortgage delinquencies stayed low in the first quarter of 2019, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Delinquency Report.


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“Steady U.S. economic growth continues to support the financing and values of commercial and multifamily properties,” said Jamie Woodwell, MBA’s Vice President of Commercial Research & Economics. “Commercial/multifamily mortgage delinquencies remain at or near record lows for most capital sources, and it’s hard to imagine loans performing better than they currently do. Given the environment, there’s little reason to expect a marked deterioration of near-term performance.”


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MBA’s quarterly analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae and Freddie Mac. Together, these groups hold more than 80 percent of the commercial/multifamily mortgage debt outstanding.


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Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the first quarter were as follows:

  • Banks and thrifts (90 or more days delinquent or in non-accrual): 0.48 percent, unchanged from the fourth quarter of 2018;
  • Life company portfolios (60 or more days delinquent): 0.04 percent, a decrease of 0.01 percentage points from the fourth quarter of 2018;
  • Fannie Mae (60 or more days delinquent): 0.07 percent, an increase of 0.01 percentage points from the fourth quarter of 2018;
  • Freddie Mac (60 or more days delinquent): 0.03 percent, an increase of 0.02 percentage points from the fourth quarter of 2018; and
  • CMBS (30 or more days delinquent or in REO): 2.61 percent, a decrease of 0.16 percentage points from the fourth quarter of 2018.

MBA’s analysis incorporates the measures used by each individual investor group to track the performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another.


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Construction and development loans are generally not included in the numbers presented in MBA’s report, but are included in many regulatory definitions of ‘commercial real estate,’ despite the fact they are often backed by single-family residential development projects rather than by office buildings, apartment buildings, shopping centers, or other income-producing properties. The FDIC delinquency rates for bank and thrift held mortgages reported here do include loans backed by owner-occupied commercial properties

Mortgage Applications Increase This Week

Mortgage applications increased 1.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 31, 2019. This week’s results included an adjustment for the Memorial Day holiday.


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The Market Composite Index, a measure of mortgage loan application volume, increased 1.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10 percent compared with the previous week. The Refinance Index increased 6 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 14 percent compared with the previous week and was 0.5 percent higher than the same week one year ago.


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“Mortgage rates dropped to their lowest level since the first week of 2018, driven by increasing concerns regarding the ongoing trade tensions with China and Mexico,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “Some borrowers, particularly those with larger loans, jumped at the opportunity to refinance, bringing the index and average refinance loan size to their highest levels since early April. Additionally, refinances for FHA and VA loans jumped by 11 percent.”


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Added Fratantoni, “Coming out of the Memorial Day holiday, and likely impacted by the financial market volatility caused by the trade tensions, purchase application volume declined for the week. Potential homebuyers may be more cautious given the heightened economic uncertainty.”


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The refinance share of mortgage activity increased to 42.2 percent of total applications from 39.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.1 percent of total applications.

The FHA share of total applications decreased to 9.5 percent from 9.6 percent the week prior. The VA share of total applications increased to 11.3 percent from 11.2 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.23 percent from 4.33 percent, with points decreasing to 0.33 from 0.42 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) decreased to 4.09 percent from 4.18 percent, with points decreasing to 0.21 from 0.23 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.24 percent from 4.33 percent, with points decreasing to 0.33 from 0.43 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.65 percent from 3.73 percent, with points decreasing to 0.36 from 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.62 percent from 3.74 percent, with points decreasing to 0.19 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

Mortgage Applications Increase In Latest MBA Weekly Survey

Mortgage applications increased 2.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 17, 2019.


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The Market Composite Index, a measure of mortgage loan application volume, increased 2.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 2 percent compared with the previous week. The Refinance Index increased 8 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 7 percent higher than the same week one year ago.


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“Mortgage rates fell for the fourth straight week, with the 30-year fixed rate mortgage hitting its lowest level since January 2018, leading to a rebound in refinances. The refinance index increased 8 percent to its highest level in over a month, and once again there was an increase in average refinance loan sizes, as borrowers with larger balances responded accordingly to lower rates,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase activity declined again, but remained around 7 percent higher than a year ago. We’re keeping a close eye on whether there may be some adverse effects of the ongoing global trade disputes on overall demand. Some potential homebuyers may be delaying their home search until there’s more certainty.”


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The refinance share of mortgage activity increased to 40.5 percent of total applications from 37.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.8 percent of total applications.


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The FHA share of total applications decreased to 9.4 percent from 10.1 percent the week prior. The VA share of total applications increased to 11.0 percent from 10.6 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.33 percent from 4.40 percent, with points increasing to 0.43 from 0.40 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) remained unchanged at 4.24 percent, with points increasing to 0.35 from 0.27 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.34 percent from 4.32 percent, with points decreasing to 0.47 from 0.49 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 3.78 percent, with points decreasing to 0.40 from 0.43 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.57 percent from 3.82 percent, with points decreasing to 0.37 from 0.44 (including the origination fee) for 80 percent LTV loans. The effective rate
decreased from last week.

Commercial/Multifamily Originations Increase 12 Percent In The First Quarter

Commercial and multifamily mortgage loan originations rose 12 percent in the first quarter compared to the same period last year , according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. In line with seasonality trends, originations the first three months of the year were 34 percent lower than the fourth quarter of 2018.


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“The momentum seen in 2018’s record year of borrowing and lending continued in the first quarter of this year,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “First quarter volumes were higher for nearly every property type, and double-digit growth in loan volume for Fannie Mae and Freddie Mac led the increase among capital sources. Low interest rates and strong property values continue to make commercial real estate an attractive market for borrowers.”


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Compared to a year earlier, a rise in originations for industrial, health care and hotel properties led the overall increase in commercial/multifamily lending volumes. By property type, industrial (73 percent), health care (41 percent), hotels (14 percent), retail (9 percent) and multifamily (9 percent) all saw year-over-year gains by dollar volume. The dollar volume of office property loans was unchanged.


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Among investor types, the dollar volume of loans originated for Government Sponsored Enterprises (GSEs – Fannie Mae and Freddie Mac) increased by 14 percent year-over-year. Life insurance company loans increased 7 percent, commercial bank portfolios increased 6 percent, while loans originated for Commercial Mortgage Backed Securities (CMBS) decreased 4 percent. 


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As is typical in the first quarter, originations decreased in comparison to last year’s fourth quarter, with total activity falling 34 percent. Among property types, declines were seen in health care (49 percent), hotels (45 percent), multifamily (40 percent), retail (32 percent) and office space (30 percent). Industrial properties bucked the overall trend, rising 17 percent from the fourth quarter of 2018.

Among investor types, the dollar volume of loans for GSEs decreased 43 percent, originations for commercial banks decreased 34 percent, loans for life insurance companies decreased by 28 percent, and loans for CMBS decreased 22 percent.

To view the full report of MBA’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, please visit:https://www.mba.org/Documents/Research/1Q19CMFOriginationsSurvey.pdf

Independent Mortgage Bankers’ Production Volume And Profits Down In 2018

Independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $367 on each loan they originated in 2018, down from $711 per loan in 2017, the Mortgage Bankers Association (MBA) reported today in its Annual Mortgage Bankers Performance Report.


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“Despite a healthy economy in 2018, the mortgage market suffered, as rate hikes hurt refinancing volume and low housing inventories priced some potential homebuyers out of the purchase market,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “For mortgage companies, there was the perfect storm of lower production revenues combined with rising expenses, which together contributed to the lowest net production income per loan since 2008. Production revenues per loan dropped despite study-high loan balances in 2018. At the same time, production expenses per loan grew to a study-high of $8,278 per loan last year.”  


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Added Walsh, “For those holding mortgage servicing rights (MSR), it was the silver lining that boosted overall profitability. Including both production and servicing operations, 69 percent of the firms posted overall pre-tax net financial profits in 2018, compared to only 47 percent of firms with net servicing income excluded.”


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Among the other key findings of MBA’s 2018 Annual Mortgage Bankers Performance Report:

>> Average production volume was $2.0 billion (8,171 loans) per company in 2018, down from $2.13 billion (8,882 loans) per company in 2017. On a repeater company basis, average production volume was $2.07 billion (8,502 loans) in 2018, down from $2.11 billion (8,824 loans) in 2017. For the mortgage industry as whole, MBA estimates production volume at $1.64 trillion in 2018, down from $1.76 trillion in 2017.


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>> In basis points, the average production profit (net production income) was 14 basis points in 2018, compared to 31 basis points in 2017. In the first half of 2018, net production income averaged 18 basis points, then dropped to 9 basis points in the second half of 2018. Since the inception of the Annual Performance Report in 2008, net production income by year has averaged 49 bps ($1,020 per loan).

>> The refinancing share of total originations (by dollar volume) decreased to 20 percent in 2018 from 25 percent in 2017. For the mortgage industry as a whole, MBA estimates the refinancing share last year decreased to 28 percent  from 35 percent in 2017.

>> The average loan balance for first mortgages reached a study-high of $251,084 in 2018, up from $245,500 in 2017. This is the 9th consecutive year of rising loan balances on first mortgages.

>> Total production revenues (fee income, net secondary marking income and warehouse spread) were 362 basis points in 2018, down from 379 bps in 2017. On a per-loan basis, production revenues were $8,645 per loan in 2018, down from $8,793 per loan in 2017.

>> Total loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – increased to $8,278 per loan in 2018, up from $8,082 in 2017.  

>> Personnel expenses averaged $5,524 per loan in 2018, up from $5,346 per loan in 2017.

>> Productivity was 1.8 loans originated per production employee per month in 2018, down from 1.9 in 2017. Production employees include sales, fulfillment and production support functions.

>> Net servicing financial income, which includes net servicing operational income, as well as mortgage servicing right (MSR) amortization and gains and losses on MSR valuations, was $203 per loan in 2018, up from $64 per loan in 2017.

Including all business lines, 69 percent of the firms in the study posted pre-tax net financial profits in 2018, down from 80 percent in 2017. In the first half of 2018, 73 percent of reporting repeater firms posted pre-tax financial profits, compared to 55 percent in the second half of 2018.

MBA’s Mortgage Bankers Performance Report series offers a variety of performance measures on the mortgage banking industry and is intended as a financial and operational benchmark for independent mortgage companies, subsidiaries and other non-depository institutions. Of the 280 firms that reported production, 80 percent were independent mortgage companies and remaining 20 percent were subsidiaries and other non-depository institutions.