Our ability to grow our earnings despite the challenges and the difficult rate environment can be attributed to three core components of our business strategy. The production of multi-family loans for investment, the quality of our assets, and the production of one to four family loans for [inaudible].
For the purposes of this morning’s call I would like to begin by talking about multi-family lending and our ongoing ability to compete for loans in a very attractive niche. Despite what you may have read or heard about others competing for product, we originated $1.3 billion of multi-family loans in the second quarter, boosting the current year’s production to $2.3 billion. At the end of June, multi-family loans totaled $18.2 billion, reflecting a $753.5 million increase since the end of December and an annualized growth rate of 8.6%. One of the benefits of this lending niche is the way we structure our product with a fixed rate of interest in the first five years and a fixed or adjustable rate of interest in years 6 through 10.
A vast majority of our multi-family loans are refinanced within three to four years of origination. And when they do, they generate income to form a pre-payment penalty. With interest rates at historical lows and refinancing activity rising, prepayment penalty income reached a record $32 million in the second quarter, increasing our net interest income and our average loan and asset yields. As a result, our margin rose six basis points on a linked quarter basis to 3.30%. The growth of our earnings also was due to an increase in non-interest income, largely reflecting the higher mortgage banking revenues. With mortgage rates still at historical lows, one to four family lending increased as did the income we produced by originating and selling such loans. In fact, more than $2.6 billion of one to four family loans were funded in the current second quarter reflecting a linked quarter increase of $180.2 million and a year-over-year increase of $1.5 billion.