Small bank turnarounds fastest in almost a year

The banks less commonly used by brokers slashed their turnaround times to seven business days in June, the first time since September 2021, according to new data.

The latest findings of the monthly Broker Pulse survey from Momentum Intelligence revealed that time taken by smaller authorised deposit-taking institutions [ADI] (those used by less than 20 per cent of broker respondents) to reach an initial credit decision shrunk to seven business days in June 2022, equalling levels seen in July and September 2021.

The survey of 235 residential brokers conducted between 1 and 14 July to uncover their experiences with lenders throughout June 2022 found that after reaching a peak of 11 days in January 2022 and hovering around the nine-day mark from February to June 2022, smaller ADIs managed to shave their turnaround times to seven days.

National Australia Bank (NAB)-owned digital lender ubank (formerly 86 400) – which opened the brand up to brokers for the first time in its 13-year history – assumed top spot in the segment with the fastest turnaround times of four days, down from five days in May.

Citibank rose from eighth to fourth position after its turnaround times contracted from 10 to six days in June, while MyState jumped one place to third rank after its turnaround times reduced from six to five days.

Heritage Bank ranked last as it had the longest turnaround times among the small ADIs of 13 days in June, although this was down from 15 business days (three weeks) in May.

Westpac turnaround times double in June

Among the large ADIs (those used by more than 20 per cent of broker respondents), Westpac’s turnaround times ballooned from six days in May to 11 days in June.

The increased turnaround times coincided with several lenders hiking their mortgage rates in June by the greatest amount in 20 years, after the Reserve Bank of Australia announced a 50-bps increase in the official cash rate from 0.35 per cent to 0.85 per cent (the RBA has since increased the cash rate by another 50 bps to 1.35 per cent, with more rises expected this year to curb surging inflation).

Westpac was the first major bank to announce that it would increase its variable rates by 50 bps, but these changes did not take effect until 21 June.

On the other hand, ANZ, the Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB) all passed on the full increase to variable-rate borrowers from 17 June.

With brokers preparing for a spike in refinancing following the rate hikes and borrowers having more time to switch to Westpac before the rate increases took effect, it is possible that the major bank witnessed a surge in loan applications before rates rose, leading to a blowout in turnaround times.

Turnaround times also increased at Westpac subsidiary St.George Bank from 11 days in May to 13 business days in June (almost three weeks).

Non-bank turnaround times stay firm

On the other hand, average turnaround times at the large ADIs (those used by more than 20 per cent of Broker Pulse respondents) remained steady at six business days for the fourth consecutive month.

Brokers reported that Macquarie Bank had the fastest turnaround times at two days, while CBA, NAB, AMP Bank, ING, and Bankwest were taking four days each to reach an initial credit decision.

ANZ turnaround times remained at eight days, while Suncorp was at seven days and ME Bank was at nine days.

Non-bank lenders mirrored the performance of large ADIs, with their average turnaround times remaining at six days for the third consecutive month.

Connective Home Loans jumped to top spot in the segment after it reduced its time to initial credit decision from seven days in May to three days in June, while Advantedge turnaround times remained at three days.

La Trobe Financial had the slowest turnaround times among the non-banks for the second consecutive month at 11 days.

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