Mortgage banking profits shot up more than 600 percent in the first quarter as the share of profitable firms was up substantially. The dramatic improvement was attributed to a wave of refinances.
Mortgage lenders earned an average of $1,088 per loan originated during the first quarter, the Mortgage Bankers Association reported today. Profits surged from $148 per loan in the previous quarter.
The report reflected data from 319 mortgage banking firms.
Production profits climbed to 55 basis points from 7 BPS in the fourth-quarter 2008.
MBA executive Marina Walsh attributed the jump to the “refinance boom” and noted a 66 percent refinance share during the period, up from 42 percent.
Average first-quarter production volume jumped to $214 million per firm from $126 million.
Profit per loan reflected a net cost to originate of $1,725 per loan, lower than $2,324 in the fourth-quarter 2008. The net cost includes operating expenses and net commissions.
Production operating expenses — including commissions, compensation and other production expenses and corporate allocations — fell to $3,738 per loan in the first quarter from $4,810.
Mortgage bankers earned a 6.60 basis point spread on warehoused loans in the most recent period, falling from 9.28 BPS.
Servicing profits were a $1 loss per loan, unchanged
The share of profitable firms rose to 85 percent from just over half in the fourth-quarter 2008.
