An increase in market lending activity and a competitive lending market have seen lender turnaround times spike to over 27 days in 3QFY21, AFG said.
The Australian Finance Group (AFG) Index for April 2021 revealed that lender turnaround times surged to 27.1 days in the third quarter of the 2021 financial year (3QFY21) from 25.2 days in 2QFY21.
According to the aggregator CEO, David Bailey, “This is the highest [turnaround times] have been at any point over the last three years.”
AFG’s figures have followed the reporting of turnaround times by the major banks at Parliamentary hearings last week, with the Commonwealth Bank of Australia (CBA), Westpac, National Australia Bank (NAB) and ANZ acknowledging turnaround time disparity between the direct lender channel and the broker channel.
The December 2020 Broker Pulse survey of 184 mortgage brokers revealed that all four major banks experienced a spike in turnaround times over the course of December. However, data from the survey covering the March 2021 period showed that turnaround times reduced.
Westpac’s turnaround time reduced from 24 days in December 2020 to 13.7 days in March, while ANZ’s turnaround times reduced from 18.2 days to 16.4 days, and CBA’s turnaround times reduced from 15.2 days to 12.7 days, although it increased to 17.2 days in January 2021.
However, NAB’s turnaround times increased from nine days in December 2020 to 9.4 days in March 2021.
Loan applications at record high
The index also revealed that the value of AFG broker loan application lodgements reached a record high in 3QFY21, while the major banks’ share of loans dipped during this period.
AFG’s brokers lodged $20.6 billion in home loan applications for the third quarter of the 2021 financial year (3QFY21).
The aggregator said this represents a new record, and an increase of 3.79 per cent on the prior quarter, and a 34.32 per cent increase on the same period last year.
Across Australia, NSW lodgements increased by 9.37 per cent on the last quarter and 40.00 per cent on 3QFY20, while Victorian lodgements increased by 6.60 per cent on the last quarter and 24.86 per cent on 3QFY20.
South Australian lodgements increased by 1.51 per cent on last quarter and 33.88 per cent on the same period in 2020, while Northern Territory lodgements increased by 5.79 per cent on the last quarter but decreased by 13.26 per cent on the same period last year.
Western Australian lodgements decreased by 7.61 per cent on the previous quarter (but its strongest period since 2015) while lodgements rose by 45 per cent on the same period in 2020.
First home buyer activity decreased from 22.00 per cent to 18.00 per cent over the quarter but has remained at record-high levels, according to AFG.
Meanwhile, the major banks and their subsidiaries captured 57.1 per cent of the market during the quarter, down from a high of 66.8 per cent in the final quarter of FY20, during the peak of the nationwide lockdown to curtail the spread of the coronavirus.
NAB was the only one of the major banks and their brands to record an increase in market share (from 8.77 per cent in 2QFY21 to 10.17 per cent in 3QFY21).
ANZ’s share reduced from 10.61 per cent to 9.39 per cent, the CBA’s share reduced from 15.71 per cent to 13.28 per cent, while Westpac’s share reduced from 7.83 per cent to 7.69 per cent.
Among the non-major banks, AFG Home Loans increased its share from 7.76 per cent in the final quarter of 2020 to 9.10 per cent in 3QFY21, while Macquarie’s share declined from 11.45 per cent to 9.93 per cent.
Commenting on the data, Mr Bailey said: “Record-low interest rates, effective government stimulus packages and an improving consumer outlook have contributed to increased activity.
“Rising house prices have contributed to a fall in loan-to-value ratios (LVR), the national average LVR is down from 73.3 per cent to 71.9 per cent. The national average mortgage size has increased by 5.9 per cent to $574,948; however, rising house prices are outpacing loan sizes and maintaining safety buffers, as reflected in the reducing LVRs.
“Highly competitive fixed rates, largely driven by the big four banks’ access to cheap government funding, has seen borrowers locking in their mortgages, with the percentage rising from 29.3 per cent to 34.0 per cent for the quarter.”