Written by: Internal Analysis & Opinion Writers
Mortgage lenders are seeing better per‑loan revenue in 2025 than in recent years, yet the cost to originate those loans remains stubbornly high, creating a squeeze even as overall profitability improves.
According to a new update from Freddie Mac, the average cost to produce a mortgage in the second quarter of 2025 was about **$11,800 per loan** — a modest improvement from the first quarter’s roughly $13,400 for retail‑only lenders, but still slightly above where costs stood in late 2023.
On the revenue side, income per loan has climbed as well: from roughly **$11,000 in Q3 2023** to about **$12,700 in Q2 2025**. That means lenders are earning more per file, helping lift their bottom lines even while volumes remain weak.
As a result, many lenders reported pre‑tax per‑loan earnings around **$900 in Q2**, the strongest result since 2021. That represents a noteworthy rebound after years of tight margins and even net losses during the housing‑slowdown period.
However, many originators aren’t declaring victory yet — because the gains remain thin when offset against persistent costs. Though production expenditures have dipped slightly, they remain elevated compared with historical averages. For many lenders, breaking even or making modest profit remains the norm, even after the uptick in revenue.
Industry analysts highlight that the rising “per‑loan income” likely stems from higher loan balances, increased fees, or tighter pricing spreads — rather than a surge in volume. With home sales volume still subdued in most regions, lenders must navigate the tension between making individual loans profitable and doing so at scale.
Moreover, cost pressures remain broad. Personnel expenses, compliance overhead, documentation complexity, and regulatory burdens continue to drive up what it costs to originate a loan. Some firms point out that efforts to streamline or digitalize workflows have, so far, only partially offset these structural headwinds.
For mortgage lenders, the situation is a partial recovery: the worst of the pressure may be easing, but the business remains fragile. The improved per‑loan economics offer breathing room, but the viability of many firms — especially smaller originators — still depends on optimized operations, efficient cost control, and favorable refinancing or purchase volumes.
In sum, the current environment offers a glimmer of optimism for mortgage lenders, but long‑term stability will likely require significant improvements — either sustained volume increases, further cost reductions, or a shift in how loans are processed and priced.
