Lenders reaching unconditional approval in record time: AFG

According to AFG’s most recent Mortgage Index – which covers the third quarter of the 2024 financial year (ended 31 March 2024) – the average number of days it took for loans to go from submission to unconditional formal approval was 17.2 days.

This is the joint fastest time on record, the group noted, tied with the same turnaround time achieved in the first quarter of FY23 (ended 31 September 2022).

Moreover, the aggregator’s index has shown that turnarounds have taken, on average, less than 18 days for more than a year (since 1Q23).

This echoed findings from Agile Market Intelligence’s monthly Broker Pulse survey, which has shown that the average time taken for lenders to reach an initial credit decision has been at record-fast levels this year, at 4.1 days in January and 4.4 days in February.

Speaking with The Adviser, AFG’s chief executive David Bailey said that the record-fast turnaround times were a result of lenders “investing in their process, both people and technology”.

Indeed, lenders have been rolling out technological improvements and innovations to accelerate the ‘time to yes’, such as National Australia Bank’s roll-out of its Simple Home Loan product (a digital end-to-end platform that works on the basis of ‘intervention by exception’ and has a median unconditional approval time of less than a day).

Increase in lodgement volume

The Q3 Mortgage Index also revealed that national lodgement volumes increased by 4.7 per cent for AFG brokers in 3Q24, compared to the same quarter in FY23.

The total national lodgement volume was $20.3 billion in the third quarter of FY24, up from $19.4 billion in 3Q23.

While lodgement volumes were up, the overall number of lodgments decreased marginally (by 0.4 per cent in 3Q24) to 32,318 lodgements, compared to 32,444 in 3Q23.

There was a 13.24 per cent increase in South Australian lodgement volumes, from $1.15 billion in 3Q23 to $1.3 billion in 3Q24. Queensland had the second-highest increase compared to 3Q23 of 10.45 per cent, with $3.86 billion in lodgement volume in 3Q24, up from $3.49 billion.

Western Australia also noticed a 6.78 per cent increase in lodgement volume from $2.26 billion in 3Q23 to $2.42 billion in 3Q24.

Victoria had the lowest increase in lodgement volumes, the index revealed, with a 0.34 per cent increase from 3Q23, which has $6.26 billion in lodgement, now at $6.28 billion.

AFG’s chief executive David Bailey attributed Victoria’s “sluggish result” to tax legislation changes aimed at property investors.

Lodgement volumes in the Northern Territory fell 54.65 per cent in 3Q24 compared to 2Q24 and a 61 per cent decrease compared to the same period last year. AFG, however, does not have a large cohort of brokers operating in the territory.

Bailey commented on the impact of brokers, stating: “Australians know their broker is there to help them and the fact that brokers have a legislated duty to put their customers’ best interests first, makes them the clear channel of choice.”

The CEO attributed the increase in brokers writing new residential home loans, recently revealed by the MFAA at a record high of 71.8 per cent, to bank branch closures around the country.

He said: “As bank branch closures continue across the country, brokers provide a vital distribution service. Mortgage brokers continue to be the channel that delivers choice and convenience for Australian home buyers.

“In a high interest rate environment with cost-of-living pressures impacting us all, having a trusted broker onside to guide home buyers through their options and help them secure the right finance to suit their individual needs continues to be vital.”

[Related: Mortgage broker market share reaches 71.8%: MFAA]