Article by Kerri Buurman of Buurman Finance Solutions, brought to you by Pulse Property Group
In the last few months, we have seen finance approvals currently taking longer than usual. You may wonder what is causing this to happen?
There is a range of factors at play. Firstly, the policies of all lenders have changed due to COVID-19 and this is causing significant delays in processing times, as all applications are scrutinised more than ever before. Often this is creating a great deal of back and forth between banks, brokers, and their clients. Additional requirements have been introduced creating more paperwork and therefore more time for each application to be assessed.
Also, we are seeing an increase in the volume of applications since the beginning of July, partly due to the government stimulus packages for building. Even if you are selling an established property, your buyer is still impacted by this as all applications are in the same queue awaiting assessment. So, the higher the volume each lender receives, the longer the service level becomes.
Another issue has been for some lenders (Westpac, NAB and ANZ mostly) who have processing centres overseas. Many of these were closed due to COVID-19 and due to the location of these processing centres, they were unable to have those staff working from home due to security risks. This pushed the workflow back to the Australian based processing centres which overloaded the system.
Finally, with the number of people under financial hardship, most banks have moved staff from processing new applications into the hardship teams to cope with the level of calls received. Again, increasing the workload of the processing teams.
We are certainly in a unique situation now, with increased volumes, tighter lending policy, and higher scrutiny.
There are some lenders who are still operating at reasonable levels (2-3 weeks for approval) but there are several lenders currently at 30 days to first touch. I would encourage buyers to look for guidance as to which lenders are providing faster turnaround times as there are definitely some lenders to avoid at the moment. This is certainly something I could assist with as most of my applications are taking 2-3 weeks for approval.
For more information or to discuss your options, contact Kerri Buurman or our office on the below details:
Phone: 08 9259 6999