The head of one of Australia’s largest mortgage lenders has said that the processing time on mortgage products is “as important as the rate”.
Speaking last week, the CEO of ING Direct Uday Sareen said, “We do compete across the spectrum of all mortgage products, but we are also looking to add value in terms of the whole engagement on mortgage processing.
“As we speak, we are looking at overhauling our entire mortgage acquisition processes. It’s important to not only get a decision quickly but also have a quick timeline and service level that one delivers."
His comments come amid increasing broker concerns over “crazy turnaround times” on home loans.
One leading Sydney broker said the “crazy turnaround times” for getting deals approved has led them to become accredited with smaller lenders and mutual banks.
“My biggest issue at the moment is turnaround times,” the broker said. “At the moment with so many of the first and second-tier lenders having crazy turnaround times, this is a massive opportunity for the mutuals in particular to grab some market share.”
Other brokers have commented: "When turnaround times are so dramatically inconsistent not just from broker to broker (and direct channel), but even between two individual applications - everything comes down to the relationship between the broker and that lender."
Mr Sareen said with reference to the bank’s upcoming Lendfast project that “by the end of this year [ING] should be in the position where… with [its] broker partners [it] should be able to cut turnaround time by one third."
“Apart from the fact that it [will be providing] a quicker turnaround," he said, "it also helps provide transparency to customers and our channel partners. So, that whole element of being able to turn mortgages around quickly is as important as the rate".
The ING CEO continued: “Of course, 3.74 per cent of available mortgage is a very competitive rate, but I think value for customers and speed of delivery is very important, and that I really see as a key driver for us.”
Touching on ING’s rates, Mr Sareen said, “Last month action we did pass on 10-12 basis points on mortgages and we did take up our deposit rates. For example, our one-year rate went up 55 basis points to 3.05, and in May we passed on the entire 25 basis points, so it’s a question of balancing out cost of funds in terms of deposit rates and mortgage rates. But what tends to get picked up is just one view of the mortgage rates.
“If we can offer a 2.75 per cent variable savings rate, 3 per cent plus on one-year term deposits and a new mortgage rate of 3.74, I think that’s a fairly competitive value for customers. So every action has to be balanced.”
Mr Sareen said ING Direct will continue to focus on mortgage products, but it will also seek to drive the number of primary bank customers through initiatives such as credit cards and insurance products for home buyers.