Mortgage Cadence's 7 Year Benchmarking Study
Where profitable lending begins
Why Benchmarking?
Our seven-year benchmarking study highlights the work Mortgage Cadence has done to guide our clients into rethinking the way they lend. For the first time, we are opening up our study to non-clients so that they too can benefit from learning how to measure and monitor the metrics that drive success. Regardless of size or type, these KPIs provide a baseline for productive conversations about product mix, marketing strategies and operational fine-tuning. We’ve studied not just the results, but the strategies that drive those results.
Here is the great news, the high performing lending teams from our benchmarking study are no different than yours. Everything they are doing is duplicable.
To gain a better understanding about the KPIs that drive high performance lending, listen in as Dan Green, EVP Marketing, and Pamela Herrmann, VP of Marketing, share how profitable mortgage lending is anchored in data and how you can create duplicable results.
Measure The 5 KPIs That Drive Profitable Lending
Productivity
Arguably the most important of the 5 KPIs, Productivity measures how effective a loan team is. More specifically, it measures the number of closed loans per employee per month. This tracks efficiencies between people, process and technology.
WHY IT MATTERS:
Productivity is the primary driver of profit. Get this one right and cost to close falls in line and declines.
Borrower Share
Borrower share is the ratio of applications taken to total customer base in the same calendar year. It’s an indication of how well the lender is doing serving the prospective borrowers who are already customers of the institution.
WHY IT MATTERS:
In a highly competitive lending environment like the one that exists today, Borrower Share holds the key to uncommon success and is largely an untapped resource for most lenders.
Velocity
Stated simply, this is a measure of the time to close, from the moment the application is received until the loan is signed at the closing table.
WHY IT MATTERS:
The amount of time a loan takes to process is directly related to borrower satisfaction, not to mention a critical performance indicator.
Pull-Through
Pull-through is the ratio of closed loans to applications taken. The higher the Pull-through rate, the lower the Cost-to-Close and the higher the profitability.
WHY IT MATTERS:
More than half of the total Cost-to-Close has been spent by the lender by the time the application is taken (including advertising, marketing, sales staff, etc.). If that loan is not closed, those funds are lost and the Cost-to-Close ratio increases for all other loans in the pipeline.
Cost-to-Close
Cost-to-Close is the total cost of manufacturing a single mortgage loan, and is inversely related to Productivity.
WHY IT MATTERS:
The need to be competitive in the mortgage lending business has never been greater. In 2017, the MBA average cost to originate was nearly $8,000. Mortgage Cadence lenders have an average Cost-to-Close of $5,291 per loan. As Cost-to-Close decreases, competitive advantages abound.
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