SYDNEY (CU)_There are two main factors which customers consider when taking a mortgage. The first and the most obvious is the price. A close second is the time taken to approve the application for the home loan.
While the speed of authorisation has always been crucial for mortgage borrowers, it has become particularly important in the type of housing market we have seen in Australia since the beginning of the pandemic, where intense competition for a lower-than-usual levels of stock, and several other factors pushed home prices to record levels. Against such a background, borrowers most certainly do not want to be waiting around while their lender moves at snail’s pace.
It is for this reason that senior executives at two of the Big Four banks in the Trans-Tasman nation would be reading Macquarie Research’s annual mortgage broker survey with trepidation. According to the study, which was published recently, Westpac Banking Corporation and the Australia and New Zealand Banking Group (ANZ) were identified as mortgage lenders who are horribly off the pace. For instance, ANZ, as well as Westpac’s main brand, both took an average of 23 days to approve a home loan, while the average time of approval for Westpac’s St George brand was determined to be 24 days.
Meanwhile, Macquarie Group reported a stellar performance in terms of speed, as the survey found that the multinational investment bank took an average time of just six days to approve a mortgage application, the shortest average time among lenders. In the case of the time taken to pick up a mortgage file for the first time, the Sydney-based banking company did so within just one to two days in 85 per cent of the time.
During its survey Macquarie also identified that a good proportion of borrowers are stretching themselves when obtaining home loans, as brokers told the bank that on an average, 38 per cent of customers borrowed close to their maximum capacity in the 2021 financial year. It could be said that Australian banks have also played a part in this, as the survey found that lenders in the Trans-Tasman nation are prepared to lend at about 7 times a borrower’s gross income, which is much higher than the 4.2 times to 5.2 times seen across the United States, the United Kingdom and Canada.