Turnarounds slow at smaller banks: Broker Pulse

Analysis of the latest Broker Pulse survey from Agile Market Intelligence has revealed that the average number of business days to reach an initial credit decision at the less commonly used authorised deposit-taking institutions (ADI) has been slowing in recent weeks.

The survey of 275 brokers was conducted between 1 and 19 June 2024 to understand brokers’ experiences when submitting loan applications to lenders through the month of May.

According to the May edition of the Broker Pulse survey, turnarounds at these small ADIs (used by less than 20 per cent of the broker respondents) increased from six days in April to eight days in May.

However, this was largely due to average turnaround times surging at four of the 13 lenders in this segment.

Newcastle Permanent was the slowest to reach an initial credit decision last month, with turnaround times extending from 10 to 16 business days (i.e. over three weeks).

As a result, the lender’s broker satisfaction rating fell from 96 per cent in April to 84 per cent in May, while satisfaction with its application process experienced an even larger drop (from 100 per cent to just 75 per cent).

Brokers noted the delays in reaching credit decisions, with one urging the bank to offer the same assessment turnaround times to brokers as it does for branches. Another broker highlighted that turnaround times and communication have been poor for over 12 months, without any signs of improvement.

Bank of Sydney had the second-longest turnaround times in this lender segment, which jumped by five days, to have an average turnaround of 11 business days in May, according to broker respondents.

There was a modest rise in turnaround times at Heritage Bank (by two days to nine days) and BOQ (by one day to eight days).

While turnaround times contracted by a day at HSBC, it still remained at 13 days (or almost three weeks).

Teachers Mutual Bank and ubank had the fastest turnaround times at three days each, while Great Southern Bank and Beyond Bank were at four days in May (turnaround times at Beyond Bank contracted by three days month on month).

Turnaround times at the large ADIs (which are used by over 20 per cent of the broker respondents) remained steady at around four days, with Macquarie Bank leading the pack at two days, followed by the National Australia Bank (NAB), Bankwest, and Suncorp at three days.

They were also stable at the non-banks at five days, but La Trobe Financial had the longest turnaround times at 11 business days (up from nine days in April).

Usage of non-banks spikes

More than half the brokers surveyed (55 per cent) reported that they used a non-bank for their client in May, the Broker Pulse survey revealed. This was up by 9 percentage points – or 46 per cent – in April.

Brokers were primarily driven to use non-banks by client circumstances, with 83 per cent citing this reason.

Out of the non-banks, Advantedge and Liberty Financial received applications from the largest proportion of brokers (12 per cent), followed by La Trobe Financial and Pepper Money (10 per cent).

Major and non-major banks

More than three-quarters (78 per cent) of brokers who used a major bank also cited client circumstances as their primary reason.

However, usage of the major banks declined from 80 per cent in April to 75 per cent in May.

Product pricing was the second-largest primary reason cited by brokers using a major bank, but this contracted from 48 per cent in April to 45 per cent in May.

There was a modest rise in the usage of non-major banks from 81 per cent in April to 84 per cent in May, with product pricing being the leading factor that appealed to brokers (78 per cent).

Macquarie Bank and ANZ were the most commonly used lenders last month, with 44 per cent of broker respondents submitting applications to them. While the Commonwealth Bank of Australia (CBA) ranked third, it lagged by 10 percentage points, with 34 per cent of brokers using the major bank.

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[Related: Revealed! Which lender do brokers most highly rate?]