Westpac’s problems with home loan applications have extended to loan settlements as the backlog grows and brokers have been told the bank is still working feverishly to expedite loans approved as far back as March 20.
An email from a Westpac representative dated Monday, April 20 said the bank was seeking to prioritise new mortgages over refinanced loans and would escalate settlements due within one week to the top of the pile.
“We continue to have some challenges with document preparation through to settlements as a result of reduced capacity arising from the pandemic lockdowns,” the email reads.
“We are presently working on applications received at CMS on 20 March 2020 and prioritising for transactions involving a purchase where settlement is due within the next five business days.”
The delays in the settlement of loans approved a month ago suggest the bottleneck at Westpac includes the preparation of loan documentation and goes well beyond the problems created by the closure of its Philippines data processing centre.
A spokeswoman for the bank apologised to customers inconvenienced by the delays, saying it was returning its focus to home loans after dealing with a deluge of loan payment deferrals.
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“We’ll be working hard to continue to process these applications as fast as possible, as to manage other services effectively, including prioritising purchase and sales activity,” she said.
In Tuesday’s release of minutes from the Reserve Bank’s April meeting, it accepted that the COVID-19 impact and new ways of working were expected to cause some level of disruption among lenders.
“Banks’ changed operating environments and their resulting reduced capacity to take on risk had affected the functioning of some markets,” the statement read.
On April 6, Westpac also closed a hotline for brokers to call, instead directing them to email the bank. They have also been told that if they send emails to the nominated addresses outside of business hours, these will not be actioned.
The bank is promising to close deals within five days for its top brokers and customers but a standard purchase is now expected to take 27 business days and a standard refinancing up to 30 business days.
Brokers have complained that the bank is still advertising its $2000 cash-back offer for customers who apply to refinance a loan before April 30 despite acknowledging that they will be unable to turn around the loan for more than six weeks.
Brokers say the bank’s big rivals are mostly able to move from accepting completed applications to drawing down the loans within a week.
Mortgage Success principal and broker Katrina Rowlands said banks experiencing the biggest delays were the same ones that moved processing work offshore to pursue cost savings.
“It might https://worldloans.online/title-loans/ have saved them a few dollars at the time but has cost them dearly now. Other lenders that chose to keep their processing onshore seem to be coping,” she said.
She praised the banks more broadly for working quickly to defer payments or set up realistic repayment arrangements for customers affected by the COVID-19 economic fallout.
“Overall I have to say that the lenders as a whole have been fantastic to deal with and incredibly empathetic and communicative, and have looked to ease stress of borrowers in a timely fashion.”
Westpac’s difficulties and delays in settling the loans are unlikely to be reflected in its interim results, which were ruled off on March 31.
It had recorded strong growth in loans via the broker channel as reported by aggregator AFG, which said its market share increased via its multi-brand strategy from 12.6 per cent in the first quarter of 2019-20 to 20.2 per cent in the third quarter of 2019-20.
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