This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

Mortgage lenders lost hundreds of dollars on average for each loan they originated last year while soaring interest rates dampened demand, according to a new report. 

The report from the Mortgage Bankers Association revealed that banks and mortgage companies lost an average of $301 for each loan originated in 2022, down from an average profit of $2,339 per loan the year before. 

“The rapid rise in mortgage rates over a relatively short period of time, combined with extremely low housing inventory and affordability challenges, meant that both purchase and refinance volume plummeted,” Marina Walsh, MBA’s vice president of industry analysis, said in a press release

“The stellar profits of the previous two years dissipated because of the confluence of declining volume, lower revenues, and higher costs per loan,” Walsh added.

FILE – A for sale sign stands in front of a house, Tuesday, Oct. 6, 2020, in Westwood, Mass. (AP Photo/Steven Senne, File)

The report showed that the cost per loan swelled to a study high of $10,624. 

“Companies could not adjust their capacity fast enough. The number of production employees declined, but not at the same pace as origination volume,” Walsh said. 

Mortgages are getting more expensive

MBA’s report also found an all-time high cost for first mortgages. The average loan balances for first-time mortgage holders shot up to $323,780 in 2022, up from $298,324 in 2021.

This marks the largest single-year increase in the history of the report, which began in 2008. 

Mortgage rates rose rapidly during the latter half of 2021 while the Federal Reserve battled growing inflation with a series of jumbo interest rate hikes. At their height, rates for the benchmark 30-year fixed rate mortgage crossed the 7 percent threshold.  

Despite the U.S. central bank’s ongoing effort to tamp down inflation leading to even more interest rate increases, mortgage rates have settled.

The average rate fell for the fifth straight week last week to 6.28 percent. At the same point last year, the average rate sat at 4.67 percent.