Residential Magazine

The Mortgage Metrics That Matter Most

Develop a business barometer to increase accountability and close more loans

By Megan Marsh

If there is one activity that can significantly impact the growth of your mortgage business, it’s tracking and analyzing your key performance indicators (KPIs). This gold medal-winning activity should be at the top of your business-growth strategy.

KPIs essentially serve as indicators on a road map to success. That, of course, means reaching your goals. These numbers are your guide to smarter, faster, easier decisions. Mortgage originators should use them, but they first need to understand them.

KPIs are measurements that track progress toward specific strategic goals. They are a defined set of chosen values that measure, systematize and summarize, so they become indicators of progress. A good way to choose KPIs for your mortgage company is to follow the SMART acronym: specific, measurable, achievable, relevant and time targeted.

Brighter outlook

One of the biggest mistakes that mortgage company executives make when planning for business growth is to repeatedly try new tactics to increase sales. Although it’s good to have new ideas, it’s just as important to learn from previous actions.

Here’s an often overlooked secret: The opportunities for your business to grow are right in front of you. You just need to know what to look for. Information and clarity are key, so start by poring over your database of clients, referral partners, real estate agents and others in your personal sphere.

You may find that the only data you’ve collected from these people are their names, associated loan amounts and your sales commissions. None of these things will help you see into the future and guide you toward growth. In essence, you are driving blind and making business decisions based on pure speculation. 

Mortgage originators are taught to close loans, but they often haven’t learned how to track numbers or metrics. Their primary concern is to assist clients, collect commission checks and try to break personal monthly sales records. This is the sort of business mentality that doesn’t truly promote growth. You should realize that true growth lies inside the numbers that led to last month’s paycheck.

This is where key performance indicators come in. They can help you paint a picture of the future, guide you toward strategic goals and help you identify how to spend your valuable time. KPIs will help you create a direct path away from stagnant production toward faster growth. If done right, these numbers will change your entire business outlook for the better.

Detailed map

Imagine looking at a map while traveling in unfamiliar territory. The map has lots of roads, exit markers and towns, but nothing is labeled. You don’t know which roads to follow, which exits to use or even how long the trip will take. All you know is that you need to be heading in a general direction. How confident would you be in getting to your destination? 

Now let’s assume you have the same map, except this one has street names, numbered exits, city and town names, and a scale for identifying distances. You’d have more confidence in reaching your intended destination, right? 

Key performance indicators are these guideposts on your business road map. KPIs are important to you as a salesperson as well as to the rest of your team. When the whole team can see how the company is performing in areas that are relevant to their job, they feel included and motivated to achieve more goals. KPIs provide answers to your questions and tell you a story about your mortgage business.

Ultimately, however, everyone’s business will look different. You’ll have to decide which indicators are most important for your company. When it comes to successful origination activities, there are many examples of relevant KPIs. 

These can include the number of contacts or leads that come in each month; the share of online leads that result in actual conversations; the share of these prospects that become preapproved buyers; and the share of preapprovals that become contracted sales. Taking this a step further, you can measure the profits of your closed loans in basis points or by yield spread premium; the ratio of purchase loans to refinances; the ratio of closed loans for each referral source; and your product mix (conventional loans, government channels and nonprime niches). 

On the operations side of your business, KPIs may include turn times for your processors, underwriters and loan officer assistants; average closing rates; client satisfaction scores; and the average number of client reviews per month. For company executives and team leaders, metrics such as sales growth rate, net earnings per hour and time spent per deal may prove useful.

Predictable results

Here’s a real-world example of how you might use KPIs. Let’s say that you have been tracking client metrics for a few weeks and discover that for every 10 referrals received, seven complete an application, four qualify for a mortgage and three are denied. Of the four qualified borrowers, two close their loans with you.

Simply put, this tells you that two of 10 prospects who come into contact with you will be converted into closed business. This is a baseline to grow from. If you do something often enough, you will get a predictable pattern of results. Knowing this one simple piece of information can help you plan and set future goals. 

From this simple exercise, you can assume that if you want to double your business, you’ll need to get 20 referrals to close four loans. If you are new to the business, your strategy might involve getting more referrals in order to close more loans. More experienced originators, however, might focus on converting more than 20% of their prospects. Actions and outcomes will be different for each person, but the numbers reveal the same things and the message is priceless. 

First steps

When you first get started with key performance indicators, there is a lot to learn and track, so take it one step at a time. You need to create a clear picture of what your business looks like. 

If you are able, go back and evaluate your most recent 12 months of closings. Next, set up a spreadsheet to track every important piece of information that will help you evaluate your business moving forward. Pick one key metric per business area, such as sales, operations and marketing, then create a baseline for the next 90 days. 

Create a map of the information you collect, then review it on a daily, weekly and monthly basis. If you are just getting started with tracking your numbers and developing KPIs, don’t try to do it all right away. Rather, add one here and there over time until you eventually create a dashboard of numbers that will serve as the hub of your business. 

For example, the first sales-related KPI you might choose to implement is the share of referrals that turn into preapprovals. Follow that up with the share of preapprovals that convert into locked loans and the number of locked loans that close each month. Set goals that aim to increase these numbers over time. 

No excuses

Share this information with your team members so they know what your goals are. Build your company culture around these numbers. Lead and manage with these metrics, every day and in every meeting.

Not only will this help you build a team, it will allow you to take the emotions out of difficult decisions as you figure out who on your team is aligned with the results. As the leader of a mortgage company, you should be asking yourself, “What kind of culture am I building — one of excuses or one of results?” Fact-based evidence must come first. 

When you don’t lead with numbers, holding people accountable becomes an emotional and assumptive task. When people are held accountable to agreed-upon numbers, however, it becomes a matter of fact. The KPIs that you’ve developed and they’re able to see speak for themselves. 

In the mortgage industry, there are stories and there are facts. Don’t lie to yourself and stay in fantasyland — look at the facts. Find clarity on where your business is at, develop key performance indicators for the actions and changes you need to make, and build the business you’ve always wanted. ●


  • Megan Marsh

    Megan Marsh is the owner of Keystone Alliance Mortgage, a top-producing mortgage brokerage in Pennsylvania, Florida, Illinois, Ohio and Puerto Rico. She is a serial entrepreneur and property investor who has launched eight businesses and built a growing real estate portfolio with 40-plus properties. Marsh is a speaker, coach and podcast host of “The CóLab,” downloadable at For speaking engagements or other inquiries contact Megan Marsh.

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