The speed of approvals has become a key element for success in the past few years with many lenders launching fast refi loans and rolling out new tech to ensure mortgages are approved quickly.

Today, as the digital transition sees more lenders moving away from paper copy to online platforms, getting a loan approved in two or three days is no longer a pipe dream, with many lenders advertising turnaround times in as little as 24 hours.

Digital lenders such as Nano (whose tech is currently powering Connective Home Loans’ new Affinity loan) are now able to approve loans in as little as 10 minutes – though admittedly, for the more vanilla, low loan-to-value ratio loans.

Speaking at a conference in Sydney in June, Nano’s co-founder and chief executive, Andrew Walker, noted that its digital end-to-end home loan enabled borrowers to apply and secure full loan approval “in a matter of minutes”, with the entire five-step process – including identity verification – existing solely online.

“Customers want more. They can do everything online and COVID-19 has exacerbated that digital trend,” he said later elaborating that this new battlefield will be customer experience and “speed in time of process as a proxy for cost”.

“And it’s quite clear now that speed is the battleground," Mr Walker said.

According to a survey of 1,000 Australians, which was commissioned by Nano and conducted by the market researcher Pureprofile during April, one in five Australian home owners had missed out on at least one property due to a delay in financing.

The same data also suggested that almost one in every two borrowers (49 per cent) waited between one and two weeks for approval, and that 22 per cent waited between three and six.

Indeed, lenders across the board have taken note and are pumping resources into their loan tech.

In late July, Westpac announced that it will roll out a “simpler digital mortgage process” – which will reportedly see some customers gain unconditional approval in as little as 10 minutes – in the final quarter of this calendar year for “select customers”.

The initial roll-out will be for new and existing sole “vanilla” applications (those on a PAYG income and with a loan-to-value ratio of 80 per cent or less) refinancing an owner-occupier loan to Westpac’s Flexi First Option basic product via Westpac’s website or banking app.

 It will then be expanded to more customers and the broker channel “throughout 2023”.

And, as speedy approvals become the norm (rather than the exception), analysis from Momentum Intelligence’s Broker Pulse survey reveals that brokers are becoming less driven to choose a lender based on turnarounds as turnaround times speed up across the board.

The survey of 221 brokers, conducted between 1 and 15 June 2022, found that only 33 per cent of brokers said that turnaround times were the primary reason they chose non-major banks in May (down from 41 per cent the month prior and 46 per cent in March 2022).

The drop in focus on turnarounds can in part be attributed to the stabilisation of the time taken by lenders to reach an initial credit decision.

For example, the average turnaround times at the large authorised deposit-taking institutions (ADI) (those used by more than 20 per cent of broker respondents) halved in May 2022 down to six, compared to the year earlier where they were at 12 business days.

Among the large ADIs, Macquarie Bank presented the fastest turnaround times, with brokers reporting it had reduced the time taken to initial credit decision from three days in April to two days in May.

Among the big four banks, CBA reduced its turnaround times from four days in April to three days in May, while NAB’s turnaround times remained at four days, and Westpac’s turnaround times reduced from eight days in April to six days in May.

ANZ ranked last among the big four banks taking an average of eight business days to reach an initial credit decision, which marked the fastest turnaround times for the bank in two years. The major also has further plans to roll out its digital loan ANZ Plus to speed up processes.

While there’s been a drop in focus on lender preferences as turnaround times stabilise across the board, in an economy of increased competition providing fast, efficient processing approvals in less than 24 hours is keeping some players ahead of the curve.

How do they get it done so fast?

Harken Finance broker Karen Adams, who operates as a “digital business”, said it’s important to have an easy online process for applications, highlighting that digital lenders such as ubank (which has now assumed 86 400’s tech piece) are using “Smart Statements process” on ubank.

“Their whole digital process is so easy and quick – so much quicker than I’m used to,” Ms Adams said.

“It’s easy to send out the link to my clients and for them to access and add their banking details so ubank can verify their income and expenses.

“The digital ID process meets all my requirements, and ticks all the boxes for speed and efficiency. If I could put every deal through ubank I would, because it’s just so fast. And I love the assessors too. We aren’t a number with them, we are a person.”

The NAB-owned bank reportedly picks up deals for assessments within 24 hours of submission through the online processing platform, which head of broker distribution, George Srbinovski, said provides the lending operations team with “greater confidence”.

“This technology provides greater accuracy, efficiency and significantly reduces the need for us to go back to the broker and customer with questions – as we get our data straight from the source,” Mr Srbinovski explained.

He added that ubank relies on technology to improve rapidity across several aspects, whether its embedding tools into its lodgement system (Simpology), such as OCR Labs’ mobile-friendly contactless verification of identity (VOI) solution, or checking signatures electronically.

Rapid refinance

But it’s not just purchase transactions that are seeing an acceleration in pace. The refinancing market – which has been booming in a rising interest rate environment – is also speeding up dramatically.

With the discharge process often causing headaches (see our “Deplorable discharges” feature from the May 2022 edition), attention is mounting towards faster refinance processes.

One such solution paving the way is by repaying the outgoing lender prior to settlement through a policy underwritten by First Title Australia.

The process allows lenders to pay out a borrower’s loan account within days, as opposed to the standard refinance that can take weeks to complete.

MSA National is one of the few organisations authorised by First Title to conduct “FASTRefi” settlements, which provides access to the borrower’s current account balances and statements to calculate an estimated figure to pay out the borrower’s existing loan.

Managing director and chief legal officer, Sam Makhoul, noted that there had recently been an increase of refinance loans being withdrawn as the customer has been retained by their existing financier – adding to the importance of speeding up processes.

“When the traditional refinance process is utilised, the financier is generally notified of the impending discharge prior to loan documents being signed and the financier requires approximately 15-20 business days to book in settlement,” Mr Makhoul said.

“The use of the FASTRefi process increases the conversion rate of refinances and reduces the risk of retention by the outgoing financial institution.”

Customers are therefore “better able to take advantage of lower rates” or access additional funds quicker through the use of FASTRefi as opposed to the traditional refinance process, he said.

Lenders can also achieve fast turnarounds due to the system integration and automation used, which enables the transfer of data to occur between MSA and its clients in “five minutes” of receiving loan instructions, he said.

The workflow system is also designed in a way that reduces the need for “manual and repetitive inputs” and allows the team to focus on handling the loan file. 

In addition, the use of DigiDocs enables the loan parties to receive and sign their loan documents electronically, “eliminating the challenges” that are experienced in cases where loan documents are issued via post, Mr Makhoul said.

“At the instruction stage, MSA requests the required documents upfront from the client as part of the instructions, this reduces the need for MSA to request additional documents from the borrower at the time documents are being signed or once the documents are returned,” Mr Makhoul said.