Banks Nationwide Post Staggering Profits off Each Loan They Make…
The Mortgage Bankers Association reports that banks are making more profits on each loan they originate. A staggering 377 percent increase was reported in just a short six month period.
Mortgage banks made a profit of $1,263 for each loan they originated during the third quarter on average. This amount is up from $575 per loan in the second quarter of 2011. Mortgage banks made $346 per loan in the first quarter.
According to Marina Walsh, the Mortgage Bankers Association associate vice president of industry analysis, higher volume helped profitability as production costs were spread over a greater number of loans. She also stated that 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.
Refinancing loans made up the largest bulk of originations and by dollar volume it was 45 percent in the third quarter, compared to 36 percent in the second quarter.