Bank turnarounds accelerate

Lender turnarounds have accelerated to near-record speeds, with one bank taking just 24 hours to reach an initial credit decision, according to brokers.

Analysis of the latest monthly Broker Pulse survey from Agile Market Intelligence has revealed that lenders are continuing to improve the time taken to reach an initial credit decision.

The Broker Pulse survey, conducted between 1 and 16 April 2024, sought to understand brokers’ experiences with lenders when submitting loan applications through the month of March.

According to the 265 broker respondents, lenders are now reaching an initial credit decision in an average of 4.2 business days – the second-fastest time recorded. This is behind only January 2024, when a record of 4.1 days was set (and down from 4.4 days in February 2024).

The fastest lender segment was found to be the most commonly used authorised deposit-taking institutions (ADIs), which reached an initial credit decision in 3.8 business days in March 2024.

The ADIs in this cohort (banks used by more than 20 per cent of the respondents) have managed to keep their time to initial credit decision at around four days since October 2023.

This improvement in speed has coincided with lenders joining the digital revolution and increasingly investing in technology to accelerate the application process and make it less onerous.

Speaking of the findings, the head of research at Agile Market Intelligence, Michael Johnson, told The Adviser: “The gaps between lenders have closed significantly, particularly when you compare the turnaround time spread back from 2021 to today.

“We can see that lenders are becoming increasingly competitive on broker and client experience and quick turnaround times are a sign that these processes are getting more efficient across the board.

“As brokers become an ever more prominent channel for residential mortgages, we expect lenders to continue to increase their focus on delivering exceptional broker experiences.

“Looking ahead, the challenge for many lenders is balancing their ability to service loans at a rapid pace, while also being able to manage the increases in volume that come from being able to do so. This is where we see the investment in technology and clear assessment criteria becoming even more valuable.”

Which banks are the fastest?

Macquarie Bank was the standout performer in this lender segment, with turnaround times falling to a record low of just one day in March, down from two days in February and January.

It was also the most commonly used lender among brokers for the second consecutive month (with 39 per cent reporting that they submitted loans to the non-major bank), while its three-month satisfaction rating among brokers was at 97 per cent.

Brokers reported that they were pleased with Macquarie Bank’s policies, business development managers (BDM), and systems, as well as fast turnaround times and good customer service.

However, one broker commented that its retention strategy and pricing were poor, while another said they were unhappy with their credit assessor and had a poor experience until another assessor was assigned.

ING and Bankwest ranked second and third, respectively, with turnaround times at three days, Broker Pulse data showed.

Bankwest recently jumped on the digital transformation bandwagon, announcing that it would transition to a fully digital bank this year, while brokers would become the lender’s main distribution channel.

Among the major banks, the Commonwealth Bank of Australia (CBA) had the fastest turnaround times at three days. Both Westpac and National Australia Bank (NAB) took four business days to reach an initial credit decision, while ANZ took five days.

However, ANZ was the second most commonly used lender among brokers (38 per cent), followed by Westpac (34 per cent) and CBA (32 per cent), while NAB was in sixth place (28 per cent).

Turnaround times at the small ADIs (used by less than 20 per cent of broker respondents) were steady at 6.5 days in March. After surging to over nine days in December 2023, it has hovered at around six to 6.5 days since January this year.

Brokers reported that mutual bank BCU had the fastest turnaround times in this segment, at two days, down from six days in February.

P&N Bank also improved its turnaround times from six to three days month on month, according to the brokers surveyed.

However, turnaround times increased at Beyond Bank from seven to 12 days in March and while it decreased at Newcastle Permanent, it was still at 12 days (over two weeks).

Non-banks reached an initial credit decision in just over four days on average, with Pepper Money ranked as the lender with the fastest turnaround times (down from five to two days month on month).

La Trobe Financial had the slowest turnaround times but it contracted from 11 days in February to nine days last month.

The Broker Pulse figures echoed a similar finding from the Australian Finance Group (AFG), whose most recent Mortgage Index found that it was taking lenders 17.2 days to go from application submission to unconditional formal approval in the March quarter, the fastest time on record.

To participate in future Broker Pulse surveys and for more information, click here.

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