The profitability of small mortgage banking companies jumped to $1,423 per loan in the third quarter, a 55% spike from the previous quarter, thanks to refinancings and strong demand for mortgage-backed securities, according to a new report from the Mortgage Bankers Association.
"There was demand from foreign central banks for high-quality MBS products," said Marina Walsh, MBA's associate vice president of industry analysis.
Such demand boosted secondary market gains to $4,069 in the third quarter, compared to $3,455 in the previous quarter, according to the MBA's Quarterly Mortgage Bankers Performance Report released Tuesday morning.
The performance figures on 320 independent mortgage banks (and subsidiaries of banks and thrifts) also show a quarterly increase in originations by these firms. These independents, on average, originated $237 million in the third quarter, a 20% gain from 2Q.
The third quarter was not a big refi quarter for the mega-banks, MBA found, but refinancings comprised 57% of originations at independents, compared to 35% in the second quarter.
The MBA executive noted that independent mortgage bankers are able catch a refinancing wave a "little bit faster" than the larger banks.
According to interviews conducted by National Mortgage News in recent weeks, some of the nation's mega banks are taking upwards of 90 days to close a loan.