Processing costs rose 69% in the past year

Mortgage lenders’ processing costs have risen by up to 69%in the past year, around 123m for the sector as a whole, Marlborough Stirling’s latest mortgage benchmarking study reveals.

This is the third year Marlborough Stirling has conducted the study, developed in consultation with the Council of Mortgage Lenders. Some 18 lenders took part, making this the most comprehensive survey yet. The scope this year widened to include arrears and customer retention as well as point-of-sale, application processing functions and intermediary business as in 2004.

The average cost of processing applications rose from 89.67 per case in 2004 to 146.49 in 2005, up 69%. This follows a cut in processing costs in the previous year from around 116 per application in 2003. If all lenders experienced similar rises, the total would be as much as 123m for the sector.

As well as the increased cost of processing, the study shows lenders are processing fewer applications per consultant this year than in 2004, with productivity per employee dropping from 1.70 completions per day in 2004 to 1.18 per day in 2005. This is lower than in 2003 when applications per consultant averaged 1.56 per day.

Time taken to process applications improved to an average of 14 days for new business, compared with 16 in 2004 and 2003.

David Edwards, managing director of Marlborough Stirling’s mortgage business, says: “The improvements in processing in 2004 have been reversed in 2005. Regulation is probably a major factor in this.”