Question: I am looking to refinance with one of the big four banks at the moment. The application process is taking very long – why the delays?
Regards, Bob White
Answer: Hi Bob, thanks for your question. Martin Castilla, Smartline personal mortgage adviser was on hand to answer this one.
“I know it’s cold comfort, but you’re not alone in experiencing delays with your application. We in the mortgage-broking industry have been drastically affected too – as you can imagine, given we work with those lenders day in, day out. The reason lies in the huge volumes of applications lenders have been inundated with since the First Home Owner Grant and Boost were more than doubled by the government. This enticed thousands of new first homebuyers into the market place keen to take advantage of the grants (in many cases, strongly encouraged by their parents). Whereas previously application numbers peaked around 3500 per month, in early 2009 that jumped to over 6000 applications per week for one particular bank. No business can cope with such sudden and sustained increase in volume. They’re not geared to assess that many files, conduct valuations on the properties being used as security (which they’re likely to require for your home given it’s a refinance application and not a purchase), obtain Lenders Mortgage Insurance (LMI) approval (another bottleneck point) and then create mortgage loan documentation in a timely manner. It’s likely your application is in that queue, and will be approved shortly. I believe we won’t see a return to normal service levels until the expiry of the current grants, when the volume pressure is expected to ease.”