Mortgage Bankers See Profit Dip to $902 Per Loan

MortgagesMortgage bankers and subsidiaries saw tighter profit margins in the third quarter, with an average of $902 on each loan they originated, down from $1,358 in the second quarter, according to a new report by the Mortgage Bankers Association.
“For lenders in our study, average production volume dropped 33 percent in the third quarter 2009, along with a drop in the refinancing share of total originations,” said Marina Walsh, MBA’s associate vice president of industry analysis. “The overall decline in production volume combined with a heavier purchase share resulted in higher per-loan production expenses, which pulled down production profits.” 
The MBA’s study also found that 82 percent of the firms surveyed reported pre-tax net profits in the third quarter 2009.  In the second quarter, 96 percent of the companies posted profits. 
The most striking number was in refinancings. The share of refinancings to total originations dropped to 44 percent in the third quarter 2009, from 62 percent in the second quarter. The share, though, was still higher than the 32 percent for the third quarter 2008.
The average production volume for company was $189.6 million in the third quarter 2009, compared to $280.9 million in the second quarter, the MBA said.
Seventy-three percent of the 306 companies that reported data for the MBA study were independent mortgage banking companies.
With a membership of 2,400 companies, the MBA is the primary national group representing the real estate finance industry.

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