The overall cost of mortgage application processing across the industry could be reduced by £81m a year, latest research from Marlborough Stirling reveals.
The study has identified an average benchmark figure for application processing of £116 per case. Marlborough Stirling says lenders could reduce this by around 28% to £84. That would result in an annual cost saving across the mortgage market of £82m, based on the total number of loans made in 2002.
Thirteen lenders took part in the study by assessing their point-of-sale and application processing functions and having these compared these with those of their competitors. The study showed that cost is not the only important consideration for lenders. Quality of service, levels of productivity and speed of processing are also crucial.
The study includes a cost vs quality matrix that shows that the majority of lenders are operating in a 'compromise position' of medium quality and medium cost. Marlborough Stirling believes those lenders occupying this position are in danger of leaving themselves without significant market differentiation.
The study also analysed the average time taken from receipt of application to issue of the offer. The average industry benchmark figure is almost 16 working days whereas the best in class figure is seven days.
Marlborough Stirling claims that to ensure they are operating at optimal efficiency lenders need to place greater emphasis on clarifying their current and future market positioning.
They can then implement strategies designed to reposition themselves against the benchmark and review the impact these strategies have had in next year's study.