It's no secret that 2020 was gangbusters for mortgage lenders. As we wrote in our 2020 Loan Compensation Recap blog post, soaring volume prompted hiring sprees and individual productivity last year. And with 2021 well underway, we've seen a solid first quarter in the mortgage market.
Now with our Q1 2021 Loan Compensation Report in hand, we're excited to share the latest trends in loan originator (LO) compensation, loan processor compensation, and staffing trends and see how they measure up to the pre-pandemic performance of Q1 2020.
Key Takeaways from the Q1 2021 Loan Compensation Report
Here's the story this quarter's data has to tell:
- LOs worked hard and made out well in Q1 2021, funding 55% more loan volume and earning 52% more in commissions per month than they did during the same time period last year.
- LOs took home larger paychecks than this time last year despite a 1.79% decrease in overall basis points (BPS) paid per loan from 103.6 BPS in Q1 2020 to 101.7 BPS in Q1 2021. Refinance loans paid out an average of 96.3 BPS compared to an average of 109.1 BPS per purchase loan.
- The decrease in average per-loan payout for LOs was largely due to the incredible volume of refinance loans produced in the quarter, 87% more than in Q1 2020.
- The year-over-year surge in refi volume wasn't the only factor behind increased LO productivity this quarter. Purchase volume was also up, with LOs funding an average of $1.1 million in purchase loans per month, up 22% percent from the previous year.
- LOs weren't the only ones with their shoulders to the wheel in Q1 2021. Processors handled an average of 17.2 loan files per month, a 29% increase over the 13.3 loan files they handled per month in Q1 2020.
- On average, processors earned $2,194 in incentive compensation per month this quarter, compared to $1,451 in Q1 2020, a handsome 51% increase in incentive compensation year-over-year.
- Staffing levels soared, and more individuals were paid a form of incentive compensation per loan. Lenders brought on 58% more processors and 32% more LOs between Q1 2020 and Q1 2021, and the number of people receiving commissions per unit increased from 3.2 to 3.6 individuals a loan.
Because the rock-bottom interest rates that were the catalyst for last year's record-breaking volume didn't get underway until Q2 of 2020, comparing Q1 2021 data to the same period last year serves as a good watermark of how much the market has changed. Moving forward, many experts predict interest rates to creep up and refinance volume to wane. The subsequent declines in volume may pressure lenders to downsize staffing. This is a trend we will continue to monitor with great interest in the coming months.