Chances are very good that, if you’re reading this, you already know what a pull-through rate is. For the handful that don’t, pull-through rate is the total number of mortgage loans approved by a mortgage lender which actually make it through to closing.
You’re probably also not surprised to read that, typically, that rate fluctuates between 60 and 70 percent. The Mortgage Bankers Association has given us some current numbers for independent mortgage bankers (who traditionally fare a little better on this KPI) with 67% from the first quarter of 2020 (down a bit from the final quarter of 2019).
Here’s the thing. Right now, the proverbial fish are jumping into lenders’ boats—lured by interest rates at historic lows. So the most important part of the traditional profit equation—making the sale—is working out nicely. But consider that every loan that doesn’t close still incurs much of the $8,000 – $9,000 total hard cost of production per loan. That’s money lost with no revenue for each loan that fails to close.
Lately, we’ve been hearing that lenders are putting a laser-focus on improving pull through rates. It has always been important, but right now, with economic uncertainly ahead and revenue pouring in the door, no lender wants to incur unnecessary costs or leave money on the table. That explains the increased investment in a digital closing experience or improved production technology. That explains the recruiting frenzy for the best loan officers or account executives. That explains the expansive efforts to win over REALTORS who can refer, or re-direct, borrowers pre-approved for loans.
Keep in mind that quality assurance on the front lines of consumer (or REALTOR) contact is also an important means to maintain and improve pull-through. If you “earn” a reputation as a consumer-unfriendly lender (even because of the actions of one or two rogue team members), it will show quickly on your pull-through rate—especially at a time when lenders are locked in fierce competition for market share.
In the coming weeks, we’ll come back to this topic from time to time. There are a number of ways to build and manage a top-flight L.O. team for maximum pull-through, and not all are tech-focused!
What are the biggest challenges to pull-through rates that you’re aware of? Ideas or suggestions for future topics? Have something you’d like to say to the readers of Deeper Thoughts? Please share with me at firstname.lastname@example.org.