Mortgage Application Approval Rate

Mortgage Application Approval Rate

KPI Details

Mortgage Application Approval Rate measures the number of submitted mortgage loan applications that are approved by the lender in relation to the total number of mortgage loan applications received over the same period of time. A relatively low value for this metric is typically related to a few common factors, including an increase in submitted applications by potentially risky borrowers (e.g., borrowers with bad credit scores, etc.), general inefficiencies within application review and approval processes (e.g., poor written/oral instructions concerning what is needed to fill in the mortgage application, increased contacts due to missing or incorrect information or documentation, untimely contacts concerning missing or incorrect information, etc.), or inconsistent training/use of job aids during processing. Each of these factors can increase employee rework (due to errors or incomplete application information) and application decision cycle times, both of which have a direct impact on borrower frustration levels and attrition rates.

KPI Definition

The number of submitted mortgage loan applications that are approved by the lender divided by the total number of mortgage loan applications received over the same period of time, as a percentage.

KPI Best Practices

• Clearly communicate info and documents needed from customers for applications and provide them with regular status updates
• Audit underwriting procedures and auto-decision rules regularly to align with company goals and strategies
• Target qualified borrowers who will have the credit history necessary for loan approval

KPI Calculation Instructions Mortgage Application Approval Rate?

Two numbers are used to calculate this KPI: (1) the number of submitted mortgage loan applications that are approved by the lender, and (2) the total number of mortgage loan applications received over the same period of time. Include all mortgage application completed by potential borrowers and submitted to the institution through any channel in the denominator. Include only new mortgages and refinances in this calculation (i.e., do not include home equity lines of credit or modifications); in most cases, new mortgages and refinances should be analyzed separately for this KPI.

KPI Formula :

(Number of Approved Mortgage Loans / Total Number of Mortgage Loans Received) * 100