What's going on with home loan applications?
Photo:
RNZ
Mortgage brokers say banks are struggling to keep up with the more active property market - and borrowers are waiting weeks to hear back about their home loan applications.
BNZ chief economist Mike Jones said earlier this week that about 15 percent more houses were selling than at the same time last year.
Mortgage adviser Campbell Hastie said bank approval times had reached a "critical level" recently. He said most complaints were about the processing time it took for new loans.
"However, we're also noticing error rates climbing on maintenance or loan restructuring-related tasks. This causes rework, often a long time after the error was made, and unwinding that error takes time - simple errors caused by workload pressure. It must be said that most of the staff on the adviser teams we deal with are great, but you can sense the pressure they're under."
He said part of the problem could be the additional rules lenders were working with. Credit Contracts and Consumer Finance Act (CCCFA)
changes
were reversed over recent years because they were creating extra costs and compliance hurdles.
But Hastie said some of the change was baked into the process and would realistically never be unwound. He said poor systems also did not help, and there had not been enough resource put into bank teams dealing with mortgage advisers.
He welcomed news recently that ASB was adding to its team, but said it would take time to get those staff working a the level needed.
"To prove the point, ASB's self-declared turnaround time was six working days as at 13 May but as at 11 June was 10 working days."
ASB said the average turnaround time for home loans via mortgage advisers was five business days, or eight business days for people who were new to the bank.
"We prioritise finance dated deals to help customers meet tight deadlines. Once we pick up the application, we're usually able to provide a decision to customers within 24 hours. For customers coming direct to ASB, same-day appointments with our home ownership managers are available, and we can provide a decision within 24 hours in most cases."
ASB said it was rare for settlements to be delayed due to the process.
ANZ said it did not favour direct channels over adviser channels, but it was seeing longer than usual turnaround times for advisers due to increased volume.
Leigh Hodgetts, country manager for Finance and Mortgage Advisors Association NZ (FAMNZ), said delays could cause pressure and uncertainty at critical moments in the home loan process.
"The drivers behind the wait times are largely a capacity and capability issue. Banks have been onboarding new staff, which is encouraging, but there's a natural learning curve that comes with training and upskilling. "
She agreed with Hastie that there were hangovers from the CCCFA changes.
"FAMNZ is calling for a more standardised approach across lenders to improve efficiency. The current inconsistencies between banks add complexity and unnecessary duplication, which only slows the process down further. We ask only that lenders treat each borrower with the same measure and same sense of urgency and fairness."
Wellington real estate agent Mike Robbers said people now needed to allow 15 working days to get approval from a bank.
"So finance conditions on offers are often taking up to three weeks to confirm. It's a long time for the property to be under offer 'subject to finance'."
Squirrel chief executive David Cunningham said it was common for banks to be just starting work on deals lodged with them 10 or 15 days earlier.
"You could argue that under-resourcing their broker teams (or under-investing in technology), is anti-competitive, and something the Commerce Commission should have looked at in
the Inquiry into Competition in Retail Banking
.
"There are stories of brokers recommending that the customer go directly to the bank if it is urgent, rather than through a broker."
BNZ general manager of home lending product James Leydon said its timeframes were at normal levels.
"Our in-house home loan partners offer fast, personalised service, providing decisions within 24 hours for eligible applications once all required information is received and lending checks are complete. For broker-submitted applications, the current turnaround time is up to 10 business days. In practice, most decisions are made sooner - with average turnaround times around eight business days - as we prioritise based on factors such as meeting customers' settlement dates."
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