Case Study: Mortgage Pricing
Situation: A leading mortgage player had been experiencing rapid mortgage growth and wanted to shift its emphasis from growth to profitability. In particular, the bank believed its mortgage sales force was leaving ‘money on the table’ and wanted to improve their negotiating efficiency.

Key Findings: We found dramatic differences in price elasticity by segment and product type. We estimated that a ‘one-size fits all’ negotiation approach was costing the bank 10+ bps of spread.

Action Taken: We developed segment and product-level elasticity curves. We implemented the elasticities through a negotiation price calculator for the mortgage sales force that was ultimately delivered through their PDAs.

Results: The bank achieved revenue improvement of $6 million (7.5bp on a $12.5 billion portfolio).