Morning Report: Mortgage bank profitability soars

Vital Statistics:

  Last Change
S&P futures 3668 2.6
Oil (WTI) 45.17 -0.31
10 year government bond yield   0.94%
30 year fixed rate mortgage   2.78%

Stocks are flattish this morning on no real news. Bonds and MBS are flat.

Initial Jobless Claims fell to 712k last week, while the Challenger and Gray job cut report showed companies announced 64,700 job cuts last month.

Independent mortgage banks earned $5,535 on each loan in the third quarter, an increase from $4,458 in the second quarter, according to the MBA. This works out to be 203 basis points compared to 167 basis points in the second quarter. Average production volume increased from $1.02 billion to $1.34 billion.

“With the surge in mortgage production volume in the third quarter, net production profits among independent mortgage bankers increased, surpassing 200 basis points for the first time since the inception of MBA’s report in 2008,” said MBA Vice President of Industry Analysis Marina Walsh, CMB. “Soaring production revenues – led by strong secondary marketing gains – drove these results and more than offset an increase in production expenses.” 

The FHFA extended the moratorium on foreclosures and evictions through January 31, 2021.

The Fed’s Beige Book reported modest growth for most of the country. Employment growth remains slow, and inflation is under control. Overall, the economy has a lot of work to do in order to recover to pre-COVID levels.

The CDC has lowered its quarantine time recommendations. The 14 day period has dropped to 7 or 10 days, depending on test results and symptoms.

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