Why has Barclays's mortgage loan approval rate declined by 20% compared to the same period last year?

Introduction

The decline in Barclays's mortgage loan approval rate by 20% compared to last year is a significant issue that requires thorough investigation. This analysis will systematically identify, validate, and address the root cause while considering both immediate and long-term implications for the bank's mortgage business.

I'll approach this problem by first clarifying key details, ruling out external factors, understanding the product and user journey, breaking down the metric, gathering relevant data, forming hypotheses, conducting root cause analysis, and finally proposing validation methods and next steps.

Step 1

Clarifying Questions (3 minutes)

• Looking at the timing, I'm thinking there might be seasonal factors at play. Has this decline been consistent across all months, or is it more pronounced in certain periods?

Why it matters: Seasonal patterns could indicate external market forces rather than internal issues. Expected answer: The decline has been relatively consistent across months. Impact on approach: If seasonal, we'd focus on year-over-year comparisons and market trends.

• Considering potential changes in loan criteria, have there been any recent updates to Barclays's mortgage approval policies or risk assessment models?

Why it matters: Internal policy changes could directly impact approval rates. Expected answer: No significant policy changes in the past year. Impact on approach: If policies have changed, we'd need to evaluate their specific impact on approval rates.

• Thinking about market dynamics, has there been a shift in the types of mortgage applications Barclays is receiving? For example, more high-risk applicants or different loan amounts?

Why it matters: Changes in applicant profiles could explain lower approval rates without indicating a problem in the approval process itself. Expected answer: The applicant mix has remained relatively stable. Impact on approach: If the mix has changed, we'd need to segment our analysis by applicant types.

• Considering technological factors, have there been any significant changes or issues with the loan application or processing systems in the past year?

Why it matters: Technical problems could be causing artificial declines or slowing the approval process. Expected answer: No major system changes or reported issues. Impact on approach: If technical issues are present, we'd prioritize IT-related hypotheses and solutions.