Customers in a hot market expect the application process to be "easy, fast and certain," exec says
Steep house-price gains and high mortgage and refinance demand are creating a “significant deviation” among lender turnaround times, according to CoreLogic.
Tim Jenner, product, data and analytics executive at CoreLogic, told The Australian that while some lenders were removing “friction” from the application process, others were still struggling with systems challenges that were causing lengthier and lengthier approval times.
“You’ve really seen a perfect storm,” Jenner said. “With the onset of COVID there’s obviously been a massive [digital] acceleration, and those that are swimming with their costumes off – you’ll see everything they’re wearing when the tide goes down.”
Jenner told The Australian that while more technologically savvy lenders were approving mortgages within a few days, others were facing bottlenecks that resulted in multi-week delays in property settlements.
Among the big banks, ANZ continues to face loan processing problems that have stalled its growth, The Australian reported. Westpac, on the other hand, has rectified some of its processing issues and is now growing in line with industry rates. All major banks have been accused of dragging out the process of discharging mortgage customers who want to refinance to other lenders.
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Andy Kerr, homeownership executive for National Australia Bank, said that with house prices still headed skyward, borrowers want quicker bank decisions.
“Customers, particularly in a hot market, want things to be easy, fast and certain,” Kerr told The Australian. “What has changed is a lot more players have invested, and ultimately the bar has been raised in terms of customer expectations, and in the last 12 to 18 months we’ve really started to solve some of those problems at scale for our customers.”
Kerr said that NAB has implemented “policy, process and tactical changes” and boosted its investment in technology to give borrowers faster decisions. The bank has rolled out its simple home loan system to about 80% of branch and video-based lending, and will launch it for mortgage brokers starting in the final months of this year, The Australian reported.
Kerr said that 20% of loans going through NAB’s simple system were unconditionally approved while the customer sat with their banker, and a further 40% were unconditionally approved on the same day.
Other big banks are starting to fight back as digital lenders come after their market share. Commonwealth Bank is introducing a direct-to-consumer mortgage with faster approvals, while Westpac has about 300 desktop robots that assist with basic processing and other tasks, The Australian reported.
However, the large banks are often saddled with ageing legacy systems that simply can’t keep up with fintechs exploiting the latest technology.
Tic:Toc founder Anthony Baum told The Australian that younger borrowers were demanding more efficient loan processes – something digital lenders can often deliver better than the big banks.
“The fastest we’ve approved a home loan from dual applications – starting their application to having their loan documentation in their inbox – is under an hour, and that is six minutes of human effort internally,” Baum told The Australian.
