Home Capital Group Inc. reported on Thursday that net income jumped almost 30% to a record $34.4 million in the second quarter as mortgage originations surged.

For the quarter ended June 30, Home Capital said historically low mortgage rates and the resilience of the Canadian housing market helped the company boost profits and increase asset growth.

Home Capital’s principal line of business, mortgage lending, contributed $25.4 million to net income during Q2, up from $18.2 million last year. The increase was driven by a 76.4% surge in mortgage originations, which totalled $1.3 billion in the quarter, driving up fee income.

Home Capital said low mortgage rates and affordability have attracted new homebuyers to the market, which helped to strengthen home sales in the first half of 2009. The company said it believes that housing markets in certain regions across Canada are forming a bottom, adding that it is “encouraged by this recovery in the real estate market.”

Mortgage securitization also contributed to Home Capital’s strong results, for which significant volume increases in the underwriting of insured residential mortgages boosted income. The company securitized and sold $655.1 million in CMHC-insured securities during Q2, up from $250.6 million in the same period last year.

In addition, Home Capital’s net interest income rose to $24.7 million, an improvement from $20.5 million in the first quarter of 2009 as the company’s cost of funding eased.

Meanwhile, net income on consumer lending was $5.8 million in the quarter, up from $4.8 million for the second quarter of 2008. Positive growth in Home Capital’s retail loan portfolio has offset declines in its Equityline Visa portfolio, for which tighter lending standards have moderated growth.

Tightening standards on the Equityline Visa product, have been “a prudent measure in the current economic environment,” according to the company, but it added that this has resulted in lower fees earned on this portfolio. Outstanding balances on the Equityline Visa portfolio reached $320.9 million in Q2, a decline of 5.4% from $339.1 million in the same period last year.

Net impaired loans continued to rise during the quarter, representing 1.3% of Home Capital’s total loans portfolio at June 30, up from 0.7% a year ago. The company warned that impaired loans will likely continue to rise in the next quarter or two, as the economy remains weak and unemployment continues to rise.

Total assets at the end of the second quarter reached $6.15 billion, up 14.8% from $5.36 billion a year earlier. Return on equity for the second quarter was 27.9%, up from 27.7% a year ago.

Also on Thursday, Home Capital announced that its board of directors had approved an increase in the quarterly dividend to 15¢ a share on outstanding common shares, for an annual dividend of 60¢ a share.