Mortgage banks saw the cost of originating loans decline in the fourth quarter, but those savings were mostly offset by factors weighing on loan profits.
Refinancings also continued to dominate the market.
The average profit that independent mortgage banks and their subsidiaries recorded on loans originated in 4Q fell to $1,093 per loan, compared to $1,263 in the third quarter, the Mortgage Bankers Association said Thursday.
The MBA released its fourth-quarter 2011 "Mortgage Bankers Performance Report," concluding that 4Q results were essentially "mixed for mortgage bankers."
The report says declining returns on originated loans are tied to declines in net secondary marketing income.
Fourth-quarter secondary marketing income fell to $4,355 per loan, down from $4,563 in the third quarter, the MBA said.
The cost to originate a loan fell in the fourth quarter to $3,324 per loan, compared to $3,360 in 3Q, but expense reductions were outweighed by secondary marketing income reductions.
Loans for refinancing dominated originations in the fourth quarter, with 57% of the loan volume representing refinancings, up from 45% in the third quarter.
The average net production income hit 58.49 basis points in the fourth quarter, compared to 66.37 basis points in 3Q.
The production volume even increased with average production hitting $313 million per company in 4Q, compared to $237 million in the third quarter. Average loan balances also grew by $5,000.