Weekly wrap - Friday 14th August
Increased delays in granting loans
Getting a loan is going to take a little bit longer at the moment, which clients, banks and real estate agents need to be more aware of. That was a trend emerging pre-COVID-19 as a matter of fact, with additional layers of verification and documents required, etc. But the great news is that approvals are still happening, and they're happening at record volumes, which is really interesting.
There's a whole lot of recommendations and strategy involved when you have a panel of 60 plus lenders. Potentially, that might in some cases be short and really quite simple, but depending on the choice of lender, the process might take longer. Some lenders only need four to six hours to grant approval, while some other banks currently are at 21 business days. Understanding a client's position and what's in their best interest is crucial to determine which way we might go.
Furthermore, it is important to understand that the bank's teams don't necessarily work out of the office down the road from where you live. These teams are split across Australia. Some are based in Victoria; some are in Western Australia; some are offshore. All of us, at the moment, are dealing with different restrictions with COVID-19, based on the State that we're in and where we actually live. There can be some delays around the timeframe, depending on which department or team and which state actually needs to be involved in the process. And when documents are signed and are mailed, it can take from two to ten days to get to the right team. So it’s really important to understand that things take longer.
The good news is that some banks can do it within a day; some are using DocuSign. Others don't need ‘wet’ (physical) signatures on documents. Things can get done really quickly and that's the amazing part of working with a broker: we know who is lending and we know what time they're taking to be able to do that.
Many clients assume that if they refinance, potentially they will then push their loan term back up to 30 years. For us the goal is always to save you money. If we have the ability to refinance over the remaining term or, in particular, a shorter term, depending on your circumstances, that's fantastic. There's going to be some real discussion around strategy in it. What is the goal with that property or with that lending? What are we looking to achieve? We need to make sure that we know what debt we want to be paying off quicker than others and which ones potentially have higher or lower interest rates.
That's a really important discussion for us to have with clients, and one we want to be having upfront, so that when we're going into lender research we know the strategy. That takes slightly more time, but we get a much better outcome because we actually have a goal and a strategy that we're working towards.
As a broker, we start with the client first and the bank last.
Second largest panel in the country
There is something we’re really proud of at Loan Market: we have the second largest panel in the country with over 62 lenders that we have access to!
It means a crazy amount of work to keep up with, but as much as that's a challenge, it presents such a big opportunity for our clients and for us as a business to be able to provide a multitude of solutions that are going to fit.
That panel comprises the four major banks, smaller banks such as Suncorp, Heritage Bank West, credit unions, regional banks; and online banks like ING. There are niche-lenders as well which provide solutions for self-employed clients for instance.
It's amazing to have so many different solutions, and it gives us a real power of leverage. It gives us the ability to put your bank on notice with three or four other options that are just as competitive, if not more competitive. It's not about changing banks or moving relationships, it happens every day that we are getting our clients an even better deal at their own bank!