It could take weeks to get a mortgage approved in New Zealand – here's what advisers can do.
Delays in mortgage application approvals are forcing borrowers to wait longer, and in some cases causing advisers in New Zealand to miss out on business.
"It could take as long as five weeks, whereas normally it wouldn't take longer than 15 days," Elyce Peters (pictured above left), co-founder and managing director at The Mortgage Girls, told New Zealand Adviser.
Auckland-based David Windler, director and mortgage adviser at The Mortgage Supply Co, said three to five business days used to be standard for approvals, but agreed the new norm has stretched out "two to three times that."
Peters, who is based in Christchurch, said the extended process "causes inequality in the market."
"It might take a broker three weeks to get a deal approved and it would only take a bank one week," she said. "So if a customer found a house last minute and they needed an approval, we couldn't do it. We're not able to get the client the approval in that turnaround time.
"We do have to do what's best for the clients," she said. "And if we can't get a deal approved, we have to tell them their other options. We'd tell them to go directly to the bank. And then we wouldn't get paid."
But it's not just the advisers who miss out. Borrowers who are forced to approach banks directly might miss out on valuable advice on varying financial options or expertise on deal structures.
"The delays can impact our ability to put together a competitive offer," Windler said. "We're stuck in the middle between the customer and the provider."
Why is this happening?
There is no single cause for the longer-than-usual wait times. But most agree the problem became apparent in 2024, only to be exacerbated in the lead-up to Christmas.
Reasons include banks outsourcing, new staff at banks and the complexity of applications, the holidays and sickness, and the sheer volume of new applicants coming in. With cash rates declining, the property market is picking up, causing more would-be homebuyers to apply for financial assistance.
Peters also pointed out that before the recent holidays, some banks that offer pre approvals stop taking them, "because the volume of applications was so high and they were so overloaded. This allowed them to stop the workflow and catch up with what was in their queue."
While this may have lessened the banks' work load, it has done little to stop the demand for new mortgage financing.
What can advisers do?
There are a number of ways advisers can mitigate the negative effects of longer wait times.
"If it's a live deal – the client already has a property – we'll escalate, we'll contact the bank, to get an assist-and-approve quicker," said Alexander McAlpine (pictured above right), a mortgage adviser at Vega Mortgages in Auckland.
Windler said, "It's all about taking care of customer expectations, so they understand the timeline. And putting together a quality application so that further down the line the banks don't come back with more questions. You have to manage the situation, have good communication with clients and control what you can control."
