Hopeful homeowners are being forced to wait up to seven weeks to receive lending approval from Big Banks as financial scrutiny is back to post-royal commission levels. Instances of buyers being asked to justify their recent annual leave and provide pay slips on settlement day to prove they are still employed have been reported in the face of rising unemployment and job uncertainty. Income testing is getting harder as Big Banks are doing more of a forensic review of pay slips. This high level of scrutiny, coupled with high levels of home loan inquiries from new and existing customers, is creating a backlog.
Rising demand for repayment relief as a symptom of coronavirus job losses and stress, refinancing to capitalise on low interest rates and a “flight to quality” away from smaller lenders to the big four which can be used to justify the timeline blowouts. The time it would take to actually look at a file has been vastly extended over the past couple of months.
Except for the institutions such as ING, Macquarie, Heritage & Auswide that have really invested in their systems, the ones that are having issues can be up to 30 (business) days to pick up a file for a new loan and much longer for a refinance. ANZ has one of the lengthiest waiting times, averaging 36 business days from application to pick up a file. In a note to brokers earlier this month, ANZ said more than 100 staff had been employed to relieve pipeline pressure. ANZ said, “We understand that our current home loan application assessment times are causing frustration for brokers, lenders and customers,” the note read. “Recent application volumes are unprecedented and have exceeded all expectations.” No detail was given as to when approval times at ANZ would return to normal. Commonwealth Bank, Westpac and NAB said they are experiencing significant wait times through the crisis as well. From a buyer's point of view, unless you have finance ready to go, you can't really move. Real Estate Agents know it is taking a long time to get finance and they aren't interested with a maybe. The extended timelines have caused some headaches for buyers given the low supply in the marketplace creating competition among buyers.
It doesn't matter who it (the lender) is, you have to factor finance into settlement. In the current environment, vendors are having to realise people want finance clauses. There is a bit of argy-bargy out there between buyers and sellers. Timelines also play a factor into the federal government's $668m HomeBuilder stimulus package. The framework stipulates a three-month turnaround from the signing of a contract to the start of construction to be eligible for the $25,000 grant. Clarification on Friday offered states the ability to offer some leeway to allow more time to gain loan and legal approvals and access state-based grants. This is likely to put more pressure on lenders as more loan applications are filed. It is an attractive offer if you qualify, especially for a first homebuyer. In Townsville based buyers, the first-home buyers grant plus the HomeBuilder is worth $45K plus other savings.
The issue with HomeBuilder is the time is quite short to find a land and building package, sign the contract and start the property. If that time is quite short, you will need assistance with finding a lender who will provide a quality outcome in a speedy manner. Talk to us about how we can assist you on 1300 861 143 with your lending needs.
Your Choice Mortgage Brokers Pty Ltd ATF Halo Innovation Trust trading as Heart Mortgage Services - Australian Credit Licence 38643
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