Smaller bank turnarounds at slowest level in 13 months

The time taken to reach an initial credit decision at the smaller banks increased last month to the highest level in over a year, according to broker feedback.

Analysis of the June 2023 Broker Pulse survey by Agile Market Intelligence (formerly Momentum Intelligence) has revealed that turnaround times at the less commonly used authorised deposit-taking institutions (used by less than 20 per cent of broker respondents) sat at an average of nine business days in June 2023.

This was the slowest rate since May 2022, when rates were still at near-record lows and the housing boom was at its peak, resulting in extended turnarounds.

The survey of 284 brokers – conducted between 1 and 12 July 2023 to uncover their experiences with lenders throughout June 2023 – found that HSBC contributed significantly to the increased average, as its turnaround times blew out to 21 business days in June (more than four weeks), up from 13 days in May.

Respondents to the Broker Pulse survey provided additional commentary on their experiences with specific lenders.

One broker suggested that HSBC couldn’t “handle their application volumes”, while another noted that the documents required by HSBC were “excessive”, delaying the mortgage process.

While one broker said HSBC had “good rates”, several noted that assessment times were too slow and urged the lender to improve their service-level agreement (SLA).

Commenting on the lengthening of its turnaround times, an HSBC spokesperson told The Adviser that the lender had been receiving a higher-than-anticipated volume of applications as a result of “continuing to offer customers competitive home loans”.

When asked by The Adviser how it would address this issue, the spokesperson said: “We are constantly looking for ways to improve our processes and will continue to invest in the appropriate resources and technology to enhance our customer experience.

Turnaround times also increased at Heritage Bank from eight days in May to 11 days in June, despite the lender having achieved four-day turnarounds at the beginning of 2023.

Stewart Saunders, head of broker experience at the recently merged Heritage and People’s Choice Limited entity, attributed the protracted turnaround times to application volumes increasing by 50 per cent in May and 67 per cent in June (when compared to volumes in April).

He told The Adviser that the lender has implemented short-term changes to shorten the turnaround times, including prioritising purchase applications and reallocating additional resources to assess applications.

In addition, he said, the lender is charting out its “longer-term technology roadmap”, which includes progressing its lending origination platform following its merger with People’s Choice.

Mr Saunders said that the Heritage and People’s Choice merger will be focused on delivering a faster time to “yes” for mortgage applications by “optimising” its operating model.

“We are investing significantly in our technology platforms which will improve turnaround times,” he said.

Turnaround times remained steady but high at Newcastle Permanent, which was also at 11 days in June 2023, according to the Broker Pulse survey.

Meanwhile, the time to initial credit decision rose month on month at P&N Bank (from seven to 10 days), BCU (from eight to nine days), and BOQ (from five to seven days).

Which smaller banks are fastest?

On the other hand, brokers told Broker Pulse that ubank and Teachers Mutual Bank were rapidly approving loans.

According to the survey, the two lenders recorded the fastest turnaround times of the less commonly used banks – at three days – followed closely by MyState Bank (four days) and then Great Southern Bank and Beyond Bank (both five days).

Auswide Bank halved its turnaround times from 12 days in May 2023 to six days in June 2023.

Large and non-banks hold steady

At the large ADIs (banks used by more than 20 per cent of broker respondents), turnaround times remained steady at five days in June.

Macquarie Bank maintained its lead at two days, followed by the Commonwealth Bank of Australia (CBA) at three days, and AMP Bank at four days.

St.George Bank was the sole lender to have increased its turnaround times from nine days in May to 10 days in June, the slowest among the more commonly used banks.

Non-banks took an average of five days to reach an initial credit decision, with RedZed (two days) and Advantedge (three days) occupying the top two positions in the non-ADI segment.

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