Most publicly held banks reported substantial declines in mortgage banking income in the fourth quarter. But earnings for the full year were stellar, up about 78% from 2019. (Includes data chart.)
If mortgage originations are operating in a typical three-year cycle, profits will likely fall this year, according to industry analysts. The wild card: how lenders react to continued demand for refis.
Profit margins in the first quarter of 2021 will decline from the fourth quarter of this year, according to a survey of mortgage executives by Fannie Mae. Executives also believe the refi boom might have peaked.
Wells Fargo accounted for most of the improvement in servicing profits among a group of 14 public companies. Earnings from origination and secondary marketing remained sky-high. (Includes data chart.)
The newly public mortgage lender, Guild, reported $182.1 million in net income for the third quarter while the soon-to-be listed Finance of America posted net earnings of $241.6 million.
The top three banks reported a combined $2.3 billion in mortgage banking income for the third quarter of 2020, up $1.3 billion from the prior period. (Includes data chart.)
Although gain-on-sale margins narrowed from the second to the third quarter, nonbanks reported strong results from their origination and secondary market activity. (Includes data chart.)
Working from home is going pretty well for lenders, with some reporting increased productivity and only one out of 33 surveyed noting a reduction in profits.
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