Even though mortgage bankers are still enjoying the steepest yield curve in years, lenders' average profit per loan fell 40% year over year in the first quarter, to $606, according to figures released Tuesday by the Mortgage Bankers Association.

Compared with the fourth quarter, the average profit per loan originated fell 32%.

The MBA blamed declining origination volume and higher production expenses.

The trade group said the "average" nonbank mortgage lender (or a subsidiary of a depository) funded $158 million of loans in the quarter, compared with $217 million the previous quarter. (Figures compiled by National Mortgage News and the Quarterly Data Report showed that the industry as a whole originated $328 billion of product in the first quarter, a 21% decline.)

Production operating expenses rose to $5,147 per loan in the first quarter, versus $4,402 per loan in the fourth quarter, the MBA said.

"It is extremely difficult for mortgage companies to effectively manage staffing levels," Marina Walsh, the MBA's associate vice president of industry analysis, said in a press release. "Either companies are stretching to meet the incredible demand, or they are carrying excess capacity which drives up per-loan personnel expense."

She added, "Despite this challenge as originations declined in the first quarter, the independents and bank subsidiaries still produced an average of thirty two basis points of production profit, primarily resulting from higher secondary marketing gains."

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