Mortgage lenders see profits edge lower at the end of 2011

The average cost to originate a home loan declined during the fourth quarter last year, but despite the rise in affordability, overall profits among mortgage lenders took a hit.

The average cost to originate a home loan declined during the fourth quarter last year, but despite the rise in affordability, overall profits among mortgage lenders took a hit.

According to a recent report from the Mortgage Bankers Association, the average cost to originate a loan during the three-month period fell to just $3,324. The previous quarter the average cost was $3,360.

As a result, the average profit on these home loans also dipped to $1,093 from $1,263.  

"The fourth quarter 2011 results were mixed for mortgage bankers," said MBA associate vice president of industry analysts Marina Walsh. "Mortgage volume increased in the fourth quarter, driven by heavier refinancing activity, translating into higher productivity."

An earlier report from the industry group found that while refinance activity was up at the end of 2011, during the week ending March 30, the share fell to just 71.2 percent of all applications. Mortgage records indicate that the previous week the share was slightly higher at 71.9 percent.



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