Mortgage Profits Double in Third Quarter, With Volume up 36%

Independent mortgage banks and subsidiaries saw profits doubling and loan volume shooting up in the third quarter of 2011 compared to the previous quarter, according to the Mortgage Bankers Association’s (MBA) Third Quarter 2011 Mortgage Bankers Performance Report, released Dec. 8.

For each loan originated in the quarter, there was an average profit of $1,263, compared to $575 in the second quarter of 2011, according to the MBA’s data, and average production volume jumped 36.2% to $237 million (or 1,114 loans per company) from $174 million (or 866 loans).

“Higher volume helped profitability as production costs were spread over a greater number of loans,” said Marina Walsh, MBA’s Associate Vice President of Industry Analysis, in a statement.  “Third quarter production expenses dropped on a per-loan basis as volume rose, although expenses remained high by historical standards when compared to other quarters with similar volume.”

The average production profit in basis points also more than doubled, from 32.86 in the second quarter to 66.37 in the third quarter.

“This was the most favorable quarterly results in production since the refinancing wave in the third quarter of 2010, when net profits were 71.46 basis points,” said the MBA.

Secondary market gains in basis points also increased, to 229 basis points from 210 in the last quarter.

Refinances made up 45% of total originations, in dollar volume, compared to 36% in the second quarter.

Written by Alyssa Gerace

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