What does an efficiency ratio measure in mortgage origination?

The efficiency ratio in mortgage origination assesses various operational metrics, primarily focusing on the effectiveness of the mortgage origination process. The correct option pertains to measuring the ratio of applications submitted to those that are approved. This metric is crucial as it helps lenders evaluate the productivity and success rate of their underwriting and processing systems.

By understanding the percentage of applications that proceed to approval, mortgage professionals can identify how efficiently they are converting potential business into funded loans. A higher efficiency ratio indicates a more effective process, where a greater proportion of applications are successfully approved, suggesting that the loan origination team is working effectively to meet underwriting guidelines and process applications efficiently.

In contrast, while other options touch upon relevant aspects of mortgage processing, they do not specifically measure the ratio of submitted applications to approvals. For example, measuring the time taken to complete applications focuses more on the speed of processing rather than success rates. The number of applications submitted and approved is a descriptive statistic rather than a ratio, and the cost of processing applications pertains to financial efficiency—not the effectiveness of conversion rates. Thus, option B captures the essence of what the efficiency ratio represents in the context of mortgage origination.