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The purchase share of total originations in 2Q 2010 rose to 65%, up substantially from 2Q of last year when refinances made up 62% of origination share, according to the 2nd Quarter 2010 Mortgage Bankers Association (MBA) Performance Report released today. This increase, spawned by the first-time home buyer tax credit option, drove loan production volume up, which in turn increased originators' profit per transaction and decreased production operating expenses. Mortgage originators made an average of $917 per loan in the second quarter, up from $606 in the first. MBA reported average profits are still well below profits from 2Q09. Each firm surveyed averaged $196.6 million in loan production for the second quarter, up from $157.8 million in the first quarter. As a result, production operating expenses decreased to $4,677 per loan. "Higher production operating expenses typically are associated with purchase production compared to refinances," said Marina Walsh, MBA's associate vice president of Industry Analysis. "But in this case, fixed costs were spread out over more loans and lenders experienced higher pull-through rates." The average pull-through rate, defined as the number of closings divided by the number of applications, increased to 72% from 68%. The percentage of firms that posted pre-tax net financial profits also rose, to 85% from 75% quarter-over-quarter. This is down from 96% in the same period of last year. MBA's Mortgage Bankers Performance Report offers a variety of performance measures on the mortgage banking industry and is intended as a financial and operational benchmark for independent mortgage companies, bank subsidiaries and other non-depository institutions. More than 70% of the 312 companies that reported production data for this report were independent mortgage companies. Write to Christine Ricciardi.

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