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Why are Lenders Making More Money Today?

Why are Lenders Making More Money Today?

Being a lender seems to be one of the most profitable jobs nowadays.  What if you establish your own lending company?  It seems like that would generate a greater income for you and also help homebuyers in your area.  This is in fact one of the main reasons why we at Home Mortgage Alliance Corporation (HMAC), NMLS# 1165808 is encouraging m0re people in the mortgage industry to join our partnership and become a lender.

Highest Origination Volume

A new report from the Mortgage Bankers Association shows that independent mortgage banks and mortgage subsidiaries of chartered banks saw a profit of $1,924 on each mortgage they originated in the third quarter of 2019.   This means that for a lender, they can have a revenue of at least $2,000 per loan.  A year ago, lenders were losing about $200 on each loan.

Does this mean that housing affordability is increasing?  Well, the truth is it was the increased mortgage volume and lower actual origination costs that are contributing to the rise in profitability.

According to the report, the total loan production expenses (which include commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations) fell to $7,217 per loan in the third quarter, down from $7,725 per loan in the second quarter.

Mortgage Refinance is Driving Profits

“A surge in refinance activity and a healthy purchase market led to robust mortgage volume in the third quarter, pushing up production profits to a high not seen since the fourth quarter of 2012 ($2,256 per loan),” said Marina Walsh, MBA’s vice president of industry analysis.

Getting a new mortgage to replace the original is called refinancing. Refinancing is done to allow a borrower to obtain a better interest term and rate. The first loan is paid off, allowing the second loan to be created, instead of simply making a new mortgage and throwing out the original mortgage.

Best Time to Be A Lender

Now is the time to be a lender and be in the mortgage business. With the booming economy and the positive outlook in the housing market, this will definitely continue towards the positive track for years.

For those who already have an NMLS number and is in the mortgage industry, we can help you become a lender in less than 30 days.  You can be a lender not only in your state but also across over 44 states and soon to be nationwide.

For more information email us at info@homemac.com or call 800-900-7040.

Reference: Housing Wire

 

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