The non-major has ceased accepting pre-approval applications until further notice.
Auswide Bank has announced that, effective immediately, pre-approval loan applications will no longer be accepted until further notice, with the exception of:
The bank stated that its decision was made to prioritise the assessment of applications from borrowers that have committed to a property purchase.
“Auswide Bank is extremely committed to help everyday Australians achieve home ownership. We do understand the importance and value for a customer to be able to enter into the property market with the confidence our fully assessed pre-approved loans provide,” the lender told brokers.
“However, we are also conscious of our obligation to our brokers that place their confidence in us to deliver the right customer experience to their clients who have committed to purchases and/or need to refinance their current facilities to achieve their financial objectives.”
According to Auswide, a recent change to its consumer credit policy extended processing times for its fully assessed pre-approval applications from 30 days to 90 days, which it said resulted in the volume of such applications “more than doubling, with no sign of slowing particularly in the higher LVR space”.
“Providing a fully assessed pre-approval that includes mortgage insurer’s assessment has been a niche offering for Auswide Bank; however, it requires the same amount of processing time as an application seeking full approval,” Auswide added.
“In line with the rest of industry, our conversion rate on fully assessed pre-approval applications is less than 15 per cent.
“The increased volume of pre-approval applications has now impacted on our ability to maintain our SLA’s for our purchase and refinance applications, and we have made the hard decision to temporarily suspend pre-approval applications, with some exceptions.”
Auswide continued: “This will allow us to return our SLAs to normal in the shortest possible time.”
The bank stated that it expects to be able to restore the acceptance of pre-approval applications “in the near future”.
Auswide noted that pre-approval applications that are in the system that are not related to a land purchase/construction application or a refinance/purchase application have been placed into a “lower priority queue” and “will continue to be worked”.
However, the bank informed brokers that pre-approval applications that are in the system where the pre-approved loan relates to a land purchase and construction application or a refinance/purchase application “will remain in the normal workflow queue”.
This latest change follows Auswide’s decision to drop its interest rate floor to 5.4 per cent, down from 5.7 per cent, effective for mortgage applications submitted from 28 October.
[Related: Auswide slashes floor rate]
Charbel Kadib is the news editor on The Adviser and Mortgage Business.
Before joining Momentum Media as a journalist in 2017, Charbel held roles with public relations agency Fifty Acres, and the Department of Communications and the Arts.
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