Mortgage Profitability

Why is Mortgage Portfolio Profitability needed?

Why it is needed?

It is a truism to say that ‘one cannot manage what one cannot see (and measure)’. Accordingly, accurate calculation of net profitability is essential for many purposes:

  • Acceptance or rejection of the application on Day 1
  • Determining the optimum loan to value ratio
  • Determining the optimum maturity of the loan
  • Pricing of the loan to allow for measured probabilities of default
  • Prioritising loans for collections management, based on measured risk
  • For the evaluation of the portfolio for sale or purchase (where different loan types and mortgages are not differentiated it is easy to average and thereby, by invisible cross-subsidisation, to confuse the profitability of the alternative sub- portfolios)


We would be delighted to undertake a complimentary consultation to show you our approach and identify where we can be of assistance to your organisation in reducing credit risk.