On the surface, mortgage banks had a good year in 1995, with profit margins increasing to a fairly healthy 8.8%, from 4.6% in 1994.

But lenders got lucky last year, according to an analysis by the Mortgage Bankers Association. Falling interest rates enabled them to make sturdy profits in selling their loans in the secondary market. This happened because higher-rate loans become more valuable when rates fall between the time the loans are closed and when they are delivered to the secondary market.

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