High Performance Metric #4: Productivity

High Performance Metric #4: Productivity

Previously in this space, I wrote about three of the five critical performance indicators that our annual benchmarking study indicates are of primary importance to mortgage lenders. Those participants in our annual study who manage these five KPIs effectively are more successful.

I’ve already written about Velocity, Pull-Through, and Borrower Share. The leading lenders in our study close loans fast, they close more of the applications that they take than their competitors, and they don’t ignore the customers who are already in their databases.

In my mind, the two we have left are the most important. They don’t stand alone because they depend upon the three that we’ve already covered, but they are the best predictors of a lender’s success in the business.

The first of these is Productivity, which is the measure of closed loans per mortgage production employee per month. This is the primary profit driver for every lender we studied. Just a small increase in Productivity yields significant increases in profitability.

In fact, it’s for this reason that we now believe that Productivity is the single most important metric in any mortgage lending operation. Get this one right and everything else falls into line.

Unfortunately, it’s not quite as easy as it sounds.

According to our most recent study, the average Productivity for lenders was 3.31 loans per employee. This is better than the 1.9 loans per employee that the MBA generally reports, but it’s still not good.

Worse, the industry has been stuck in a low Productivity vortex for many years now. Part of this is a staffing issue. We are currently overstaffed, largely due to the extra people it took to deal with the many compliance changes we experienced after the crash.

Another part of it is that lenders are not utilizing the full power of the automation they already own. I have a lot more to say about that and will likely do so in this space.

For now, the important thing to note is that you need to know your current Productivity level. After six years of study, we can look at a lender’s Productivity and have a very good idea of how profitable the institution is. Give me a call and I’ll prove it to you.

Ashley Gravano

Sr. Enterprise Account Executive. Coffee Connoisseur☕️Relationship Builder🤝Board Member📋Social Media Expert📱

4y

Great share Dan!

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