Greater demand for home loans and a subsequent rise in application volumes has resulted in industry-wide pressure on approval times.
Earlier this year, agents claimed mortgage approvals had blown out from around 20 to 60 working days as lenders struggled with rapidly rising demand and a growing backlog of applications, worsened by COVID-19.
In a fiercely competitive residential market, these rigid lending options and long delays have left buyers with increasing fears that their offers will be beaten out by rival bidders. These issues have placed a spotlight on the historically slow and outdated systems used by major banks that leave many buyers struggling to achieve liquidity.
According to government analysis, total mortgage lending for May topped a record $32 billion, an increase of about 95 per cent over the same time last year with owner-occupier borrowing increasing by $23.4 billion.
Meanwhile the coronavirus crisis has prompted many Australians to realise their seachange or treechange ambitions as remote working becomes normalised, and as property prices in the major cities surge.
According to ABS data, 2020 saw a net increase of 43,000 Australians residing in regional areas, in what was the largest net inflow to the regions on record.
A major focus area for this has been bridging loans, which stand to represent a huge portion of the property financing market over the next five years.
A recent survey by consultancy Digital Finance Technology revealed that more than 1.6 million households are planning to downsize over this period, alongside an exponential rise in regional migration.
It is part of the market that traditional banks aren’t interested in leveraging, due to the short loan periods and paperwork involved, but has the potential to play a huge role in helping clients overcome frustrations when it comes to sourcing funding fast.
Fortunately, we are already seeing new solutions, such as TechLend, start to emerge in this space.
Techlend is a non-bank lender here to disrupt the lending market by offering homebuyers interest-free, paperless, bridging loans with same-day pre-approval, in a revolutionary move to help reduce the stress from buying and selling properties for both homeowners and brokers.
Hinged on its proprietary technology, TechLend leverages property data and values to deliver same day pre approvals. This quick turnaround takes the pressure off downsizers and families to help source funding fast - offering certainty, speed and transparency. Reducing the stress and paperwork of balancing mortgages helps both buyers and brokers.
These types of solutions have the potential to revolutionise the lending sector, but they are long overdue.
The Australian Financial Complaints Authority (AFCA) recently announced that home loans were the subject of almost 10% of the complaints that they received in the last year, making them the second most complained about topic.
Brokers are familiar with these frustrations and must begin considering faster and more innovative solutions from non-bank players if they are to help alleviate these concerns for their clients.
Aaron Bassin is the CEO of TechLend.
