KPI for Measuring of % of Subprime Mortgages posted in category Banking

WinningKPI - Banking - KPI for Measuring of % of Subprime Mortgages posted in category Banking

This indicator is for measuring the number of subprime mortgages as a % of the total number of mortgages, in a given time period. This is calculated by dividing the total number of subprime mortgages, by the total number of mortgages, in a given time period.
Subprime Mortgages stand for the mortgages approved for borrows who do not qualify for market interest rates due to low income (no proven ability to pay the loan), bad credit history etc.
In it in a bank’s interest to minimise this KPI, as low as 0%, as it represents a high risk, especially the risk of Charge-Offs.

Formula:
Total number of Subprime Mortgages/ Total Number of Mortgages x 100

KPI Units: %

KPI Time Frame: update annually

Posted by Oana Boteanu | Help to protect community: Flag for moderation

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Example:

A bank is calculating the number of subprime mortgages processed over a year period.

Total number of subprime mortgages: 100
Total number of mortgages: 500

% of Subprime mortgages:
100/500 x 100 = 20%
This is a very high figure, as 20% of the total number of mortgages is from subprime mortgages.
Subprime mortgages represent a high risk to the bank’s financial stability.
Oana Boteanu | + | September 13, 2012 at 10:04 am

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