Turnaround times for mortgage applications spin out again

Then, it was taking on average two weeks to turn standard mortgage applications around.

Advisers say it is a combination of interest rate drops and a general increase in housing market activity that pushed turnaround times out again.

The combination means it is more favourable for property buyers than at any time over the past couple of years.

The increased activity has caught banks off guard. “It should never happen, but it always does,” Jeff Royle, iLender founder says.

“They haven’t got the staff to deal with the rise in mortgage applications. Over the past two years staff have not been replaced as they have left.”

AdviceHQ founder and director David Green says there are several steps banks could easily take to alleviate the situation.

For instance, he says most major banks provide updates on their turnaround times but providing them weekly would be a better outcome for everyone.

The same goes for pricing. Two banks are on the ball in this respect, but if all provided weekly pricing, Green says this would save banks, advisers and clients time and money.

He says banks could also provide read only access to loan details. Advisers could not alter anything. “One bank has provided this for years. I am sure Australian banks do as well. It saves so much time and money for all parties.”

And Green says one servicing channel for all deals would make life easier. This would mean consistency and equality and iron out peaks and troughs in each channel.

“This has, in part, been trialled at some major banks and would be more efficient for banks, advisers and clients.

“These are easy wins for banks and would make a huge difference to their efficiency.”

Whangarei-based Key Mortgages director Jeremy Andrews says some banks can turn around applications in less than a week, but it is not the norm.

“Our ability to escalate an application and get a response within a day or two is becoming harder to do. Some banks say, ‘no’, while others will say ‘maybe just this once, but you can’t keep on doing it’.”

Andrews says it is not only frustrating for advisers but also clients. “Some get impatient, blame the adviser, go to another and don’t understand they have to start again, slowing down the process to end up with the same result.”

Key Mortgages is recommending clients use a four week finance clause in their sale and purchase agreements, particularly if they are a low deposit borrower and need a property valuation. If a client has good equity and doesn’t need a valuation, then two weeks is usually sufficient, Andrews says. 

“It is still not acceptable, though.”