Peter White AM, Managing Director of the Finance Brokers Association of Australia (FBAA), has spoken of the problems that mortgage brokers are having to deal with regarding turnaround times.
White put the troubles down to a lack of preparedness on behalf of major ADIs and the unprecedented demand for loans, which were sending turnaround times up to unsustainable levels.
“This whole preapproval market issue is a great challenge to so many, probably tens of thousands of Aussies, not just in Sydney, but around the country.,” he told Sydney radio station 2GB. “It actually stems back into last year during COVID, where a lot of the major banks were offshoring their back office administration functions, and found out during COVID that there were issues with it.”
“We have been told, predominantly by major banks, that they are looking to increase staff. In one bank, they're talking nine hundred staff, others are talking 80 staff and developing technologies to improve their turnaround times. Between the impact of COVID, the continuing low interest rate environment and a hot property market, that the banks basically can't cope with it.”
“But they should have been prepared, this is on them. They saw this coming and they were saying all the great things, but basically didn't deliver. So it's a real problem.”
White went on to emphasise that brokers should allow for the increase in turnaround times and manage the expectations of their clients around them.
“The latest data coming out of banks is saying (that) it's coming back to about four or five weeks,” said White. “But in all honesty, that's a joke. I've been in this industry over 40 years. These things take four or five days, not four or five weeks. That's just ludicrous.”
“And there's a real caveat to this from anybody who's looking to get a loan. Please do it now. Don't wait to the last minute because it's going to burn you on the way through. It's very challenging.”
“Given the rate of mortgages that are written in Australia on a national basis, there'd have to be tens of thousands of people are getting impacted, either to a small degree or to a large degree.”
“I must admit that the cases where people who are waiting in excess of a month are getting much less, which means the banks are slowly getting on top of it. But the amount of people where it is still taking two to four weeks is just ludicrous.”
“It’s so disheartening to people who are trying to buy their Aussie dream. It's not just one property, it can be multiple properties because of these extensive delays.”
“The important thing, too, in today's marketplace, you need to be speaking to a mortgage broker,” he added. “They have an understanding of what's happening in the entire industry. If you go to a bank, they just can't tell you…the broker operates under a Best Interest Duty, which is a new piece of law that started at the beginning of this year. And they are obligated by law to ensure they do the best for you.”