The Mortgage Bankers Association of America recently released its 2021 Independent Mortgage Banker Profitability Report, which revealed the overall financial performance of the independent mortgage market. The report showed that the average Independent Mortgage Banker (IMB) lost $301 per origination in 2020. This was a decrease from the $3,274 in profitability seen in 2019.

The report showed that production revenue and cost of originating loans significantly impacted IMB profitability. Production revenue declined 24%, reflecting the decline in origination volumes seen across the industry. Additionally, the cost of originating loans was up 13% from 2019. This increase was due to the expenses associated with staffing, technology, and new competitors.

The report also highlighted the importance of technology and efficiency in the mortgage industry. It demonstrated that the cost of origination, as a percentage of the loan amount, was up 19 basis points over the same period. This indicates that while the cost of producing a loan was increasing, efficiency was decreasing due to new competitors and advances in technology.

The report also found that IMBs experienced high levels of non-acquisition expense, or overhead. Non-acquisition expense increased on a per-production basis by 11%. This increase is likely related to higher interest rates, which means more money goes to overhead instead of profits.

In conclusion, the MBA’s 2021 Independent Mortgage Banker Profitability Report showed that the average IMB performed worse in 2020 than 2019 in terms of profitability. This was due to the decline in production revenue, an increase in the cost of originating loans, as well as higher levels of non-acquisition expenses. The report also highlighted the importance of technology and efficiency for IMBs in order to remain competitive in a competitive market.

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