MBA reports higher percent of originations, loan profits

9/1/2011

The banking industry appears to be making gains, which could indicate a positive commercial loan environment when coupled with low interest rates.

Despite economic turmoil throughout the summer due to the fluctuating stock market, a downgrade of U.S. credit and natural disasters affecting business in key markets, banks have seen an increase in profits, according to the Mortgage Bankers Association.

Independent mortgage banks recorded an average profit of $575 per loan during the second quarter of 2011, up from $346 in the first quarter. The MBA's Mortgage Bankers Performance Report also noted that refinancings took a smaller share of originations, at 36 percent as opposed to half of all new loans in the first quarter.

"Contrary to overall MBA industry data in which estimated production volume declined, the average firm in our study of independents and subsidiaries experienced volume growth," said MBA associate vice president of industry analysis Marina Walsh.

In addition to recording an increase in new loans and profits, the MBA has raised its originations forecast for 2011 to $1.1 trillion. Coupled with the Federal Reserves' holding of current low interest rates for the foreseeable future, this could spell an increase in lending across the financial industry.