As the average income earned per origination increased for mortgage lenders in 2025, so too did the costs to produce that loan, according to newly released data from Freddie Mac.
Average mortgage loan production costs were approximately $11,800 in the second quarter of 2025, the government-sponsored mortgage investor revealed in a recent update to its “2024 Cost to Originate Study.” That represents a vast improvement from the first quarter’s $13,400 for retail-only mortgage lenders but is still $200 higher than the third quarter of 2023. The update does not present a year-to-date average for 2025.
“As mortgage rates continue to gradually lower, we’re seeing the ‘rate-lock’ effect begin to thaw, potentially unlocking inventory and spurring transactions,” the report stated.
Per-unit revenue has trended upward along with production expenses, though, rising from $11,000 in the third quarter of 2023 to $12,700 in the second quarter of 2025.
Lenders netted per-loan pretax income of roughly $900 in the second quarter, which Freddie Mac says is the highest average mark for lenders since 2021.
The Mortgage Bankers Association (MBA), which also tracks costs to originate for independent mortgage banks (IMBs), recently reported that average loan production costs remained above $11,100 in the third quarter after dipping to $10,965 in the second quarter.
Marina Walsh, vice president of industry analysis at the MBA, noted in a statement accompanying the figures that “the increase in recorded production revenue drove profits higher,” despite closed loan volumes remaining mostly flat and production expenses rising slightly in the third quarter.
IMBs and mortgage subsidiaries of chartered banks polled by the MBA have only reported five profitable quarters in the 15 quarters going back to the start of 2022, including eight consecutive quarters in the red beginning in April 2022.
A historic housing market slowdown that followed a historic housing boom during the COVID-19 pandemic began after the Federal Reserve aggressively hiked interest rates in the fall of 2022.
Rapid home price growth and elevated mortgage rates have made homebuying largely unaffordable for typical earners, bringing the pace of home sales to multidecade lows in 2023, 2024 and 2025 and upsetting the cost structures of mortgage lenders forced to spread seemingly ever-rising costs to originate over fewer originations.
Average pretax production losses of seven basis points among IMBs and mortgage subsidiaries in the first quarter were reversed to 25 and 33 basis points of production profits in the second and third quarters of 2025, respectively, MBA data shows.
