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NAB sees applications rise 45%

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Annie Kane 6 minute read

The major bank saw a 45 per cent increase in mortgage applications in the first half of the year, with strong activity from the broker channel.

On Thursday (6 May), the big four bank released its half-year results for the first half of the financial year 2021 (1H21), revealing that it had seen mortgage applications rise 45 per cent in the half (however, the number was not disclosed).

New lending (excluding limit increases and redraws in the previous six month period) totalled $32 billion in 1H21, up from $29 as at 2H20 and $27 billion in the six months ending March 2020.

The bank is now the fourth-largest mortgage lender of the big four banks (dropping a place as ANZ rises to third-largest), with approximately 14.4 per cent market share.

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Brokers continue to lodge a larger proportion of NAB’s loans, contributing to 47.9 per cent of new lending in the half (up from 45 per cent in March 2020), and now accounting for 40 per cent of the bank’s total home loan portfolio.

In total, the volume of loans written by brokers (and including Advantedge loans) total $114.8 billion.

However, while applications and new lending were up, the bank’s overall book dropped from $302 billion as at March 2020 to $300 billion as at March 2021. 

According to the bank, this was partly due to borrowers paying down their debts faster.

NAB CEO Ross McEwan commented: “Right now, 70 per cent of our customers are at least a month in advance and across the book, the actual book is about 45 months in advance of payments. 

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“So, we’ve been encouraging customers to get ahead of their payments so that there is always a cushion for them should rates rise as well.”

While the major bank did not focus on broker-lodged turnarounds, the NAB CEO told media that “there has been a major increase in the applications coming through and [we] are seeing our volumes starting to build…

“Our home loan processing has stood up very well with the massive increase in volumes – 45 per cent, that’s across the board [in] both city and it’s also [in] regional markets [for both] application and refinancing,” he said.

Chief financial officer Gary Lennon acknowledged that the increase in flows was placing “pressure on the back office”, but the CEO added that the bank was “using technology to assist”.

“We’ve put in place what we call a Simple Home Loan process that’s gone very well. 

“Fifty per cent of the loans that come through that process for our proprietary channel are being signed off in a day, and the other 50 per cent is an average of five days, which is pretty good in this marketplace.

“Our colleagues in the bank have really stepped into this, and we see it an area of growth in this bank going forward.”

According to the bank, its “time to yes” for loans improved by 30 per cent in the half (when compared with March 2020), which it attributed to its Simple Home Loans digital home loan application tool.

The tool is expected to be rolled out to the broker channel in the second half of the financial year. 

Indeed, NAB said that as it is “simplifying and improving the home lending experience”. It expects that NAB will “return to market share growth in second half 2021”.

Overall, the major bank’s half-year results showed cash earnings were up to $3.34 billion, 94.8 per cent higher than the same period last year, which reflected growing momentum in the bank and improving economic conditions.

“Broadly speaking, we are optimistic about the future for Australia and New Zealand – and for NAB,” Mr McEwan told media on Thursday morning.

He added NAB had delivered “a clean set of results with no large notable items”.

[Related: Automating broker loan assessments ‘on the priority list’: ANZ]

NAB sees applications rise 45%
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Annie Kane

Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Email Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

 

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