Westpac is promising to settle loans that were approved more than a month ago but will take six weeks or more to refinance new customers.
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.
“Well 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,” the spokeswoman for the bank said.
Confirmation of the ongoing snafu follows Tuesday’s release of minutes from the Reserve Bank’s April meeting, where it accepted the impact of COVID-19 and new ways of working was 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.
Westpac also closed a hotline for brokers to call on April 6 instead directing brokers to email the bank. Brokers have furthermore been told that if they send emails to the nominated addresses outside of business hours they will not be actioned.
The bank is promising to close deals within five days for its top brokers and customers however a standard purchase is now expected to take 27 business days and a standard refinancing up to 30 business days.
Brokers have complained the bank is still advertising an offer of $2,000 cash back for customers who apply to refinance before April 30 despite acknowledging they will be unable to turnaround the loan for more than six weeks.
Brokers say the banks 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 offshore to pursue cost savings.
It might have saved them a few dollars at the time but has cost them dearly now. Other lenders that chose to keep their processing on shore seem to be coping, Ms Rowlands said.
Ms Rowlands praised the banks more broadly for working quickly to defer payments or set up realistic repayment arrangements for customers affected by the economic fallout from COVID-19.
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.
The difficulty and delays the bank has been having in settling the loans is unlikely to be reflected in the banks interim results which were ruled off on March 31.
Westpac had seen strong growth in loans via the broker channel as reported by aggregator AFG which said its market share grew 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.