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The MReport Webcast: Friday 12/5/2014

Mortgage banking profits hit another stumbling block in the third quarter, sinking slightly as a decline in secondary market income offset rising production numbers. The Mortgage Bankers Association reported Thursday that home lenders took in an average profit of $897 on each loan they originated over the third quarter. That average was down from $954 in the second quarter but still a vast improvement from an average per-loan loss of $194 in the first quarter.

According to the group, average production volume came to $437 million per company last quarter, up from 378 million the prior period. By count, lenders averaged about 19 hundred new mortgages per company compared to 17 hundred in Q2. At the same time, secondary marketing income for the quarter was 261 basis points, a decline from 270 basis points the previous quarter. Including all business lines, 83 percent of the nearly 350 companies in the study posted pre-tax financial profits last quarter, up from 81 percent in Q2.                                               

A gloomy week in economic news meant additional declines in mortgage interest rates. The average interest rate for a 30-year fixed-rate mortgage fell below 3.9 percent for the week ending December 4th, Freddie Mac reported Thursday. According to the company, it was the lowest average 30-year rate recorded since the end of May last year. Frank Nothaft, chief economist and VP at Freddie Mac, attributed the latest round of decreases to a week of underwhelming economic releases. Both new and pending home sales disappointed in November, and an early indicator of payroll growth for the month came in under economists’ expectations, helping to put a lid on interest rates.

About Author: Jordan Funderburk

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