- Home loan approvals are taking up to three weeks due to staff shortages and policy changes, claim brokers.
- Blow-out in turnaround times is a headache for buyers, especially those looking to buy at auction.
- Brokers claim the wait time is much longer than six months ago.
Some banks are taking up to three weeks to process home loan applications, and everything from staff shortages to changes in lending policies has been blamed.
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Mortgage brokers told OneRoof that turnaround times were between seven and 14 working days. Last year, approvals took fewer than 10 working days.
One mortgage broker told OneRoof that the blow-out in processing times had become a headache for his clients. “It’s pretty bad at the moment,” he said.
However, ASB and BNZ denied the wait times were above normal levels. While ANZ, who brokers reported to have the quickest turnaround time, admitted it was taking slightly longer than usual due to the high volume coming from advisers.
GV Financial Services founder Gareth Veale said brokers were being told a variety of reasons for the delays, with some banks saying they were the result of staff shortages and the debt-to-income ratios brought in by the Reserve Bank of New Zealand. Others appeared to be prioritising direct customers over those who came via a broker.
GV Financial Services financial adviser Gareth Veale said the delays with banks processing home loan applications were frustrating. Photo / Supplied
Veale said the delays had put pressure on clients looking to buy homes at auction.
Tella chief executive Andrew Chambers said each bank was different; some took two working days while others took up to four weeks. The turnaround time for more complicated applications often ballooned out further.
Chambers said a reduction of staffing at the banks was making the approval process longer and some of his team members were noting record wait times. He said what really frustrated financial advisers was that clients had a perception that banks were prioritising direct applications. One bank was even promoting a 24-hour turnaround for direct customers.
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“There’ a disparity between the direct and the adviser channel that really frustrates advisers. It’s like we are the bulk of the origination, but you are not treating us from a client point of view as well as clients that go direct to branches.”
Both Chambers and Veale did not believe this was in the best interests of clients who were using brokers to make sure they got the best deal for them.
Banks did not publicise their turnaround times, but Chambers felt an acceptable wait would be closer to around five working days. “They kind of treat it like 'it’s up to us, so live with it if it pushes out.'”
Tella chief executive Andrew Chamber said the processing times were slow, but had been worse. Photo / Supplied
Because some banks took longer to process applications than others, Chambers said he would direct clients to "quicker" banks if an urgent answer was needed.
Chambers urged anyone needing a loan to speak to a financial adviser as soon as they could and preferably before they even started looking. “Quite often it’s not just about pulling the info together and submitting it to the bank, sometimes it’s about tidying the borrowers' state of affairs.”
OneRoof reached out to the five major banks for a response. ASB said its turnaround time had improved in the past six months and was currently sitting at six working days, while ANZ said times did fluctuate depending on the type, complexity and volumes of applications.
An ANZ spokesperson said the processing times were about the same for both direct and adviser channels because they did not favour one over the other. However, there was a "slightly longer than usual turnaround for advisers due to increased volume".
BNZ favoured direct customers by processing their applications within 24 hours for eligible applications once all required information was received and lending checks were complete, while those submitted by mortgage advisers took an average of eight working days.
BNZ general manager of home lending product James Leydon said it was actively processing home loan applications across all its channels and prioritised applications based on factors such as meeting customers' settlement dates.
KiwiBank was unable to provide a response by deadline and Westpac did not respond at all.
Harcourts agent Alex Dunn told OneRoof he had noticed an uptick in the number of unprepared buyers at open homes. Many seemed to be relying on online finance tools.
Dunn said he often gets a mortgage broker to call such buyers. "He has a chat and will say, 'Look, you can’t afford anything. You can’t borrow any money because you are missing a whole bunch of steps, such as checking credit card debt and layby pays.”
While Dunn agreed with the financial advisers that approvals were taking longer than normal, he felt the problem could lie with the valuer rather than the banks themselves. Valuers were now taking several days to assess a property whereas they would have previously done it on the same day they were called, he said.
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