How approval times became the new 'battleground' for home loans

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on December 07, 2021 Fact Checked
How approval times became the new 'battleground' for home loans

Home loan approval times have been a topic of contention as big banks struggle to process the pipeline of new lending and refinances.

According to co-founder and CEO of Nano Home Loans Andrew Walker (pictured below), big banks typically take in excess of 20 days to approve new lending.

The digital lender claims it can process and approve mortgage applications in less than 10 minutes.

"If you can approve a loan in 10 minutes, that's great. You can approve a loan in half an hour or an hour - that's fine, too," Mr Walker told Savings.com.au.

"The real battleground here, moving forward is going to be the people that can't compete with a new service standard or being able to get a loan approved in 24 hours or less - that's really the new battleground."

He explained the reasons some lenders - particularly legacy banks - take a lot longer with applications than others.

"Most of the mainstream lenders actually tell you the industry average is 22 days' time to approval," Mr Walker said.

"The mainstream banks are all sitting on Tandem mainframes that they bought in the 80s; they're sitting on an outdated back end system of record - really unstable, and unscalable.

"But they haven't updated for 30 to 40 years, the processes are the same, the products are the same."

Tandem Computers was a manufacturer of computer systems for ATMs and banks founded in 1974, and acquired by Compaq in 1997.

"The only way that you can improve the system, or the time to 'yes', is by either completely upgrading the system or starting from scratch. And that's very, very expensive," Mr Walker said.

"That's a multi billion dollar spin for banks, and banks are profit machines. They need to distribute dividends to the shareholders.

"They typically don't [fully upgrade] - they push the problem forward."

Read more: Q&A with Nano's Andrew Walker

AndrewWalker600.jpg

Andrew Walker, Nano Home Loans' CEO and co-founder. Image supplied.

ANZ in particular has been singled out for taking upwards of six weeks to process some home loans, especially through broker channels.

This resulted in a couple of months in mid-2021 where the major bank lost well over $2 billion in mortgage customers at a time when other majors grew theirs considerably, according to APRA banking data.

Discharged mortgages and external refinances outpaced the rate of new customers coming into ANZ's pipeline as housing credit growth hit a four-year high.

ANZ executive Mark Hand previously said this was "a level we weren't happy with".

"What we didn’t predict ... was the huge, sustained rise in application volumes in 2021, particularly in the refinance market with customers shifting to take up fixed rates," Mr Hand said in a bluenotes interview earlier in 2021.

"This means we are now handling double the applications we were two years ago."


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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate* Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
FixedMore details
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
VariableMore details
ZERO APPLICATION FEES

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
ZERO APPLICATION FEES

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees

Rates correct as of January 17, 2022. View disclaimer.


Photo by Stillness InMotion on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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