ME Bank has been working extended hours to get turnarounds back on track after its 3.99 per cent rate contributed to a deterioration in approval times.
The industry super fund-owned bank has been taking up to eight days to process mortgages from application to conditional approval.
It has also been taking up to six days to send applications from conditional approval to unconditional approval.
ME Bank’s general manager of brokers, Lino Pelaccia, said about 50 per cent of applications are receiving immediate conditional approval thanks to the bank’s new technology systems.
The other half are taking about eight days to get to conditional approval, he told The Adviser.
Mr Pelaccia said approval turnaround times were initially stretched by ME Bank’s decision to pass on cheap swap rates in the form of a record 3.99 per cent three-year fixed rate.
Approval times worsened when the bank subsequently increased the fixed rate to 4.09 per cent due to higher funding costs.
Brokers were notified four days before the rate rise to give them time to lodge outstanding applications, triggering a further spike in demand, according to Mr Pelaccia.
“We realised this would increase turnaround times, but felt that it was appropriate to do so in order to deliver on broker commitments to their customers,” he said.
“We received a month’s worth of applications in the days before we lifted the rate, including a five-fold spike in applications on the final day.”
Mr Pelaccia said ME Bank has been working hard to fix the problem.
“ME has been throwing additional resources to reduce the backlog including weekend work, and we expect delays won’t get much longer for those applications that aren’t approved immediately,” he said.
“We will continue to work extended hours until we are back within service levels.”
ME Bank’s growing broker business contributed to a $29.1 million profit for the six months to 31 December 2014, which was up 14 per cent on the previous year.
Home loan settlements grew by 41 per cent to a record $2.4 billion, with broker settlements up 175 per cent to $1.1 billion.
[Related: ME Bank appoints new broker head]