Mortgage banking activity was one bright spot in an otherwise lackluster earnings period, according to a third quarter review by analysts at FBR Capital Markets. “Activity was up 35 percent from 2Q11 as we saw lower interest rates drive another refinance boom, whereby refinances accounted for almost 80 percent of all originations,” FBR said. The analysts expect originations and gain-on-sale margins to be up significantly from 2Q11 due to the persistent decline of mortgage rates through the quarter. “We continue to recommend investors stick with banks that have sizable mortgage banking operations because refinance levels should stay elevated from low interest rates, and some large players have exited the business, which should bode well for gain-on-sale margins,” the FBR team said.