Mortgage loan production margins for mortgage banking companies declined by 40% in the first half of this year, according to peer group surveys conducted by the Mortgage Bankers Association and the Stratmor Group.Despite the decline, the MBA said profit margins remained respectable following the record-breaking profits of 2003. Average pretax production margins fell to 54 basis points during the first six months of the year, compared with an all-time high of 90 bps, or 0.9% of the loan balance, for all of 2003. Driving the decline was lower origination volume, which in turn resulted in higher origination costs, the MBA said. On the bright side, average servicing income was $24 per loan in the first half, a sharp improvement from an average loss per loan of $107 last year. More information about the peer group survey can be found at http://www.mbastratmor.com.

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