Independent mortgage banks and mortgage subsidiaries of chartered banks posted record high revenue in 2016, but before they could enjoy the profit, mortgage expenses also reached a record high.

As a result, according to the Mortgage Bankers Association’s Annual Mortgage Bankers Performance Report, independent mortgage banks only made slightly more money in 2016 than in 2015. The average profit came in a $1,346 on each loan originated in 2016, up from $1,189 per loan in 2015.

Marina Walsh, MBA’s vice president of industry analysis, noted the rise reflected a larger industry trend of increasing volume in 2016 over 2015, based on MBA industry estimates.

“Average loan balances also rose, reaching a study-high $244,945 for first mortgages in 2016,” Walsh said. “This translated into higher revenues that reached a study-high $8,555 per loan in 2016. Yet production expenses also reached a study-high, at $7,209 per loan, and offset a portion of these revenue improvements.  The net result was a slight increase in overall net production income.”

This year marks the 7th consecutive year of rising loan balances on first mortgages.

The report stated that average production volume was $2,679 million (11,161 loans) per company in 2016, compared to $2,405 million (9,906 loans) per company in 2015.

On the servicing side, Walsh said, “Mortgage lenders with servicing portfolios experienced significant fluctuations in the valuation of their mortgage servicing rights related to corresponding interest rate fluctuations during 2016.” 

“Most servicers reported net servicing financial losses in the first half of the year, followed by recoveries by the end of the year,” she added.

Net servicing financial income, which includes net servicing operational income as well as mortgage servicing right amortization and gains and losses on MSR valuations, dropped to $34 per loan in 2016, down from $73 per loan in 2015.

Looking back at only the fourth quarter, Walsh said, at the time, that mortgage lenders with servicing portfolios benefited from higher net servicing financial income in the fourth quarter 2016 due to increases in the valuation of their mortgage servicing rights, driven by the same rising interest rates.