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Turnaround times worsen

Bank staff shortages and strong sales activity have made turnaround times worse than ever in 2020, according to advisers across the industry.

Tuesday, March 3rd 2020, 5:05PM 3 Comments

Advisers say a lack of staff to process home loan applications, coupled with rising activity, have made the situation even worse than 2019. 

"I think it has accelerated," said Squirrel's John Bolton. "The Auckland market has sprung back to life, and we're seeing a lot more 95% LVR stuff. There's higher levels of complexity, extra compliance and more paperwork. The volumes have blown the banks out," he added.

Bolton said banks were understaffed at central processing centres, causing some applications to be delayed by 1-2 weeks. "I'd consider 2-3 days a normal response time, but it's getting to a week before they look at a deal." 

Craig Pope, of Pope & Co Mortgages in Wellington, described turnaround times as a "nightmare" in the current market. 

"To make it worse, people are in a mad panic trying to put cash offers in on houses so are very impatient trying to get quick answers. So it's a bit of a perfect storm. We are stuck in the middle trying to manage clients' unrealistic expectations with the slow turnaround."

Glen McLeod called on banks to take action to improve the deteriorating situation. He said BNZ was taking eight days to process applications, while other banks took between two to six days. 

"We are definitely finding that the turnaround times are affected," McLeod said. "Also, the experience of some of the team members that are looking at applications and asking questions that have been clearly stated in the application diary note. We are told that it is not helped by advisers sending in [many] applications to several lenders and then choosing after they have four approvals."

McLeod said there was "frustration all around": "We want to provide an excellent service to our clients and our lending partners. Something has to give. Either the banks need to staff-up or they need to talk to advisers that have a low conversion ratio and find out why."

Mortgage advisers cited staff shortages and turnaround times as one of the biggest problems facing the industry, in economist Tony Alexander's latest quarterly survey. 

Squirrel's Bolton said banks and advisers needed to find a cross-industry solution to the ongoing problem. Technology could prove vital, he said.

"Technology should ultimately play a bigger role. There's still a lot of double-handling of applications going into the banks. There's a big opportunity for us to standardise forms and make things better for everyone. Our industry and the banks need to solve this together."

Tags: Lending mortgages

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Comments from our readers

On 4 March 2020 at 5:21 pm valkyrie6 said:
I think this is a little bizarre to see banks quote “record volumes” as the cause of the current poor turnaround times, if you ask any real estate agent, the number of actual house sales has dropped away dramatically compared to say 5 years ago but the actual prices have gone sky high, poor turnaround times by the banks can’t be attributed to high sales volumes because the sales are just not there, so what causing the slowdown in service ?.
Are banks currently also experiencing their own regulatory requirements via the FMA and need to “slow things down” or are they understaffed to maximize that yearly profit, or is the third-party banking quality of application submissions still poor?
There are some very professional advisers out there who summit fantastic applications and have draw down ratios of 75% to 100%, Yes that’s right 100%, so advisers should not even be contemplating submitting a deal without thinking to one’s self ,””I know 99% this is going to get approved first time “’.
Downside for the good brokers is that no matter how good your quality of submission is your still stuck in the Que behind all the rubbish and multi submitted applications that are just going nowhere.
Technology ?
BNZ made it compulsory for all NZFSG brokers to submit deals via their loan market owned CRM system which was supposed to speed up the assessment process but by the looks of the current BNZ turnaround times starching out to 8 to 12 working days this obviously does not work, plus with BNZ continuously talking about poor quality of application submissions this submission via CRM is just a waste of time and could actually be breaching the privacy act by loading personal banking data up on a cloud based system without permission from the customer ( which is an FMA requirement ) .
What if the banks developed their own Portals where applications are submitted direct to the banks on writable PDFs that can be “data scraped” which in turn loads the information fast into the bank systems, no silly CRM systems in the middle.
That would mean the banks would have to spend a little or invest in the current adviser part of their business that draws in 40% of loan settlements currently and climbing, could be a good investment ?

Maybe Banks could have a 3 tier quality rating for advisers based on draw down ratios say 70% to 100%, 40% to 70% and 0% to 40% with better turnaround times offer accordingly, (just an idea) .

On 5 March 2020 at 10:29 am Amused said:
Poor turnaround times at banks have traditionally been caused by a busy market, lack of resourcing at the various broker units and certain brokers in the industry who continually multi submit deals to several banks at once. Granted that in the current climate of ever-increasing assessment check lists by banks brokers need sometimes to have two or three options up their sleeve, however banks need to start prioritising assessment of applications from brokers that have not been multi submitted.

The biggest issue I hear from bank staff regarding turnaround times is broker applications submitted with incomplete information attached i.e. evidence income or insufficient bank statements. This slows up bank assessment times continuously and impacts upon other brokers and their well packaged deals. Unrealistic expectations around turnaround times are also an issue for the mortgage broking industry to address. Brokers themselves need to educate their customers much better explaining that customers need to have their finance pre-approved prior to them wanting to make offers on properties. A customer contacting you on Monday who doesn’t have their finance pre-approved already is unlikely to be able to secure finance in time for the auction they want to bid at that Thursday. Expecting banks to drop everything for your customer’s super urgent application is becoming unrealistic. Gone are the days of mortgage brokers simply telling customers to just make a cash offer without first checking that they can secure them finance. Brokers that are still doing this won’t be around in this industry much longer. We are moving into a licensed industry now and the advice process starts at the very first conversation we have with our customers.

The key solution though to poor bank turnaround times is for the lenders themselves to invest in technology. The banks need to build online portals for mortgage brokers to log into to submit customer loan applications to banks directly. These systems can be built in such a way that a broker must attach and supply the correct information each time for the lender to assess the deal. This will in some cases then enable a loan application to be approved by the lender on the spot or with a significantly reduced approval time to that currently possible. We’re talking about a direct “broker to bank portal” like what Partners Life have done with their MUM online application software enabling insurance advisers to secure underwriting decisions for their customers in many cases instantly. This is the ultimate future for all mortgage brokers when submitting lending application on behalf of customers to banks. A broker to bank portal independent of any third parties such as dealer groups.
On 5 March 2020 at 10:54 am Chatterbox said:
Really :-) slow turn around, or brokers on holiday as well? The last loan application processed with Squirrel to ANZ started in Oct 2019 and finalised in a drawdown Feb 2020. LVR was 30% and servicability high. No risk. It was clearly delayed at the time in the hope by the bank that rates would rise in the interim. It was that or incompetent bank back office staff who kept raising requests for single pieces of information over time to validate insurances or whatever else they could think up for a borrowing level that was under $300k.

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 ▼6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 ▼6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
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Lender Flt 1yr 2yr 3yr
BNZ - Classic - ▼7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 ▼7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼6.79 - -
Co-operative Bank - Owner Occ 8.40 ▼6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 ▼7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 ▼6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 ▼7.74 7.29 6.59
SBS Bank Special - ▼7.14 6.69 5.99
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 ▼6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.21 7.29 6.65

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