Borrowers applied for more purchase mortgages than refinance loans, and the higher per-loan production costs meant declined profits for independent mortgage bankers and subsidiaries in Q309, the Mortgage Bankers Association (MBA) said. The MBA’s quarterly mortgage bankers performance report put the average per-loan profit at $902 in Q309. That’s down from Q209, when the average profit was $1,358 per loan. The report is a survey of 306 independent mortgage bankers and subsidiaries of banks, thrifts and hedge funds. “Production profits were still healthy in the third quarter of 2009, although not at the same level that we saw in the second quarter,” said Marina Walsh, MBA's associate vice president of industry analysis. Fewer mortgage firms posted pre-tax net financial profits in Q309; 82% of firms reported profits compared to 96% in Q209. Production volume was also down from $280.9m in Q209 to $189.6m in Q309. “For lenders in our study, average production volume dropped 33% in the third quarter 2009, along with a drop in the refinancing share of total originations. The overall decline in production volume combined with a heavier purchase share resulted in higher per-loan production expenses, which pulled down production profits,” Walsh added. Refinance mortgages accounted for 44% of activity in Q309, down from 62% in Q209. However, the share of refinance loans was still above Q308’s 32%. As a result, the cost to originate, which includes production operating expenses and commissions minus all fee income, but excludes secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread, increased. In Q309, the cost to originate was $1,950, compared to $1,295 in Q209. Operating expenses — commissions, compensation, occupancy and equipment, and other production expenses and corporate allocations — was also up, $4,376 per loan in Q309 from $3,581 per loan in the Q209. Despite the decline in profits, the pull-through rate, which gauges how many loans close compared to applications filed, only slightly declined from 73% in Q209 to 72% in Q309. Retail outlets had closings per sales employee per month of 6.7 in Q309, down from 11 in Q209. Write to Austin Kilgore.