Large lenders show the most improved turnarounds

In the fifth episode of the Broker Pulse Podcast, Broker Pulse’s head of broker success Michael Johnson and The Adviser editor Annie Kane reflected on the latest Broker Pulse survey results from 243 brokers sharing their mortgage application experiences during the month of July. 

Michael touched on the sustained recovery in loan turnarounds since April 2021. The upturn was most pronounced for large lenders, said Michael, after spikes in demand, technological bottlenecks, and more complex customer verifications triggered extended blowouts over the previous months.

Tightening turnarounds

Michael also pointed out that “the other three majors have finally started to move in a direction that brokers will be happy with, which is [...] getting below that sort of 15-day mark”.

Major banks CBA and NAB managed to bring their turnarounds down to 7.8 and 9.6 business days, respectively, following months of processing lags. ANZ’s time to initial decision also substantially shrunk since the beginning of the second quarter and is now sitting at 13.8 business days on average.

“It’s still a long way from where brokers [...] want to see them but it is a move in the right direction,” Michael added.

Despite a 20 per cent increase in net profit after the closing of the financial year in June, however, broker-lodged applications decreased to 39 per cent for CBA. 

“I think, personally, a lot of that has to do with their turnaround times because as we know, they were one of those up there in the teens for the last few months,” said Annie.

“So it's the first real month that we’re seeing them under 10 days… I imagine the next period of financial reporting, the next couple of quarters might see that go up again.”

Brokers also reported an average turnaround of 8.2 business days from ME Bank, down from 16.1 business days in December 2020 and 14.4 in April 2021. 

Other top-performing non-majors have kept their turnaround times to a minimum, never exceeding average durations of 3.9 business days for Macquarie and 5.2 business days for ING over the last 18 months.

Small lenders, banks and non-banks alike, similarly demonstrated improving turnarounds, with Teachers Mutual Bank showing the greatest improvement. After time to initial credit decision took at least 10 business days for more than a year, the lender managed to clinch a 5.4-day average in July 2021.

Revamps on third-party channel applications

Annie noted that digitisation in mortgage processes has made it “a bit easier for brokers to write loans remotely”. Government regulation also helped ease pressure on loan processing by allowing digital signatures. 

Major banks further attributed their visible improvement in processing speeds to technological upgrades in the broker channel as well as increased staffing and the calibre of their operations team.

“They put in new technology. And I think, also it is because they’re seeing the broker flows dropping, so they're trying to recoup some of that business,” added Annie.

In a bid to reach more brokers, 86 400 also recently sealed a partnership deal with Finance Systems and Technology (FAST), giving 1,200 brokers access to the bank through the aggregator. 

Dipping broker applications

Weighing in on what may have contributed to the decrease in broker-lodged applications since March 2021, Annie suggested it is likely a mix of multiple factors. 

“I think part of that comes down to the fact that [...] supply is so low - the fact that we just have fewer properties on market,” she said.

Annie also attributed fewer applications to pandemic-induced lockdowns that limited prospective investors from inspecting the properties.

Tune in here to listen to the entire podcast.

As Broker Pulse celebrates its second anniversary this September, brokers can expect more comprehensive findings from the knowledge base, complete with scenario-level analysis of lender performance.