Banks Post Higher Profits off Each Loan

December 15, 2011

Banks are making more profits on each loan they originate — a 377 percent increase in just a six-month period, according to the Mortgage Bankers Association. 

On average, mortgage banks made a profit of $1,263 for each loan they originated during the third quarter — that’s up from $575 per loan in the second quarter of 2011. In the first quarter, they made $346 per loan. 

“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. “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.”

Refinancings made up the biggest bulk of originations — by dollar volume it was 45 percent in the third quarter compared to 36 percent in the second quarter. 

Source: “Mortgage Banks’ Profits on Originations Soar 377 Percent,” RISMedia (Dec. 14, 2011)

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