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Mortgage Industry Profits Down Last Year

WASHINGTON, DC-Average returns dropped to 15.8% last year from 19.1% in 1999, according to the Mortgage Bankers Association and the Stratmor Group. This year looks more profitable thanks to a boom in refinancings.

By Wendy Watkins | Updated on June 21, 2001

WASHINGTON, DC-The mortgage industry suffered a drop in profits last year, but those numbers may be on the rebound this year because of a refinancing boom, according to results from the latest peer group roundtables conducted by the Mortgage Bankers Association and the Stratmor Group. The MBA/Stratmor peer group survey includes a cross section of mortgage industry professionals.

In 2000, the weighted average return dropped to 15.8% from 19.1% in 1999. Overall profitability was down because of a dramatic dip in loan production volume during the first quarter of 2000, while the production end, which includes including warehousing and secondary marketing operations, showed a mild recovery during the second half of the year, but not enough to make up the difference.

Experts attributed the profit drop to a trend that started in 1998, which was a record year for the industry. To handle production then, companies added resources that were still in place the following years, when there was less production, says Marina Walsh, a financial analyst with the MBA.

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