Low mortgage quotes often mean high lender efficiency, survey says

Posted by  on Sep 07, 2010

If the mortgage quotes you're getting this year seem like they're all over the place, a recent survey could reveal why. When the Mortgage Bankers Association surveyed its members about their profits, responses indicated that most lenders earned only about $606 for every mortgage loan they originated in Q1 of 2010. At the same time in 2009, that profit margin was $1,088.

That profit drop reflects today's unusual market, and the pressure lenders have found themselves under to produce quick, competitive mortgage quotes. If you're only making $606 per deal, you've got to get efficient, no matter what kind of business you're in. When the MBA dug deeper into their survey, they found that lenders fell into one of two categories:

  • Highly efficient mortgage lenders that leveraged technology and skilled staff, and
  • Less efficient mortgage lenders that either overstaffed or understaffed their origination units.

An overstaffed mortgage lender might sound like the kind of place that can close a deal fast. Unfortunately, the MBA survey also shows that efficiency decreased in most mortgage lenders' offices, down to 68% from 73% in the previous quarter. Wild swings in local real estate market make it hard for some lenders to set the right staffing levels. Therefore, an understaffed office may take too long to respond to requests for mortgage quotes. And an overstaffed office may be forced to deliver higher mortgage quotes to help cover overhead costs.

Meanwhile, a mortgage broker with the right mix of experienced staff and updated technology can often steer their business through a turbulent market with just a few bumps. Automating large portions of the application and qualification processes can keep staff members focused on solving problems instead of processing paperwork. The very best lenders weave a customer service experience that includes the right mix of online service and personal interaction.

Based on the survey's results, lenders and brokers that solicit requests for mortgage quotes online tend to require lower operating expenses than competitors who rely solely on brick-and-mortar branches and representatives. Instead of cold calling leads, team members focus on closing deals for prospective customers. This way, lower mortgage quotes often signify better service instead of just a better deal.


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