Mortgage Cadence Benchmarking Study Identifies Key Differentiators of High-Performing Lenders
15 August 2019 - 11:59PM
Business Wire
A focus on optimizing staffing models and
streamlining processes helps combat market volatility, earning
Mortgage Cadence clients market-leadership position in productivity
and cost-to-close metrics
A new study from Mortgage Cadence, an Accenture (NYSE: ACN)
company, identifies several key factors that differentiate
high-performing lenders from others in today’s mortgage market,
which is characterized by an industry-wide housing supply shortage
and all-time-high costs to originate a mortgage.
Mortgage Cadence’s seventh annual Lending Performance
Benchmarking Study draws on the analysis of data from mortgage
lenders across the country that use the full suite of Mortgage
Cadence loan origination technologies.
The report notes that high-performing lenders share three
characteristics. First, they benchmark their performance against
the competition, identifying areas for growth and improvement.
Second, they optimize their staffing models and cross-train their
teams so they can quickly adapt to the ebb and flow of loan volume
without hiring additional team members, thereby maximizing
profitability. Finally, high performers perfect their processes
then map their loan journeys from application to close to eliminate
bottlenecks, optimize technology and clarify ownership of
touchpoints.
A key element of the study is Mortgage Cadence’s benchmarking of
the year-over-year performance of its clients. The data compare
individual lender performance year-over-year using five critical
key performance indicators:
- Velocity — the amount of time it takes to close a loan;
- Borrower Share — the ratio of applications taken to total
customer base in the same calendar year;
- Pull-Through — the ratio of closed loans to applications
taken;
- Cost-to-Close — the total cost of manufacturing a single
mortgage; and
- Productivity — the measure of closed loans per mortgage
production employee per month.
The study notes that although Productivity improved to an
average of 3.33 loans per employee in 2018, up from 3.29 in 2017,
Velocity suffered, increasing by more than eight days in 2018, to
64.53 days. Pull-Through also suffered, dropping to 48.21% in 2018
from 50.08% in 2017. Both metrics contributed to the highest
Cost-to-Close measure since the study’s inception: $5,643 (although
still significantly less than the Mortgage Bankers Association
(MBA) average of $8,975).
According to the study, the decrease in performance is partly
the result of a housing supply problem: When the number of
interested home buyers exceeds housing inventory, the pre-approval
process is lengthened and Velocity increases. Pull-Through also
suffers, as a lender can’t expect to close on an application if the
borrower can’t find a home to purchase.
“The mortgage market’s volatility over the past 30 years has
caused the Cost-to-Close to rise,” said Bryan Ireton, managing
director for Mortgage Cadence, Accenture. “Even so, high-performing
lenders have been able to consistently realize higher profits by
fine-tuning their processes according to benchmarking results.”
Other key benchmarking findings include:
- Three-quarters (76%) of Mortgage Cadence clients outperformed
the MBA Productivity average of 2.00 loans per employee.
- Approximately seven in eight Mortgage Cadence clients (86%)
outperformed the MBA Cost-to-Close average of $8,975.
- The Mortgage Cadence top performer for Pull-Through reported an
incredible 85.38% metric — meaning that they converted more than 17
out of 20 loan applications to active mortgages.
For more information on the Mortgage Cadence Benchmarking Study,
please visit www.mortgagecadence.com.
About Mortgage Cadence Since 1999, Mortgage Cadence has
been providing the best people, process and technology for
enterprise and mid-market lenders who desire to deliver an
exceptional borrower experience. From point-of-sale through
post-closing, Mortgage Cadence offers reliable software and
dedicated people, supporting lenders every step of the way.
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version on businesswire.com: https://www.businesswire.com/news/home/20190815005135/en/
Pamela Herrmann Mortgage Cadence +1 720 480 7655
pamela.a.herrmann@mortgagecadence.com
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