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The expected high volumes of borrower activity this year would likely put more pressure on big banks to keep up with non-majors in terms of loan processing, according to the latest report from Lendi.
David Hyman, chief executive officer of Lendi, said big banks were more susceptible to processing blowouts and delays over the past year. In fact, Lendi reported a 33% annual increase in the value of unconditional loan approvals processed in December, a month that traditionally experiences a slowdown in submissions.
"Volatility in customer and lender behaviour largely normalised by the December quarter, however our data shows the non-major lenders delivered a more consistent processing experience over the course of 2020," Hyman said.
Non-majors outpaced big banks in new applications and refinancing assessments, loan processing times, and variable-rate offerings.
In terms of new applications, non-majors spent only 13 days on the initial assessment, faster than the 15 days for big banks. Non-majors also registered faster assessment times for refinancing, down to 14 days during the last quarter of 2020. Big banks, on the other hand, spent 15 days on average to process refinancing applications.
Overall, the loan processing time among non-majors hit 39 days in the September quarter. While this reflects an increase from the 37 days during the preceding quarter, it is still faster than the 59-day processing time among big banks recorded in the same three-month period.
“With January also looking strong in terms of loan submissions, there will be continued pressure on lenders to avoid the blowouts we saw in application and settlement processing last year. The seasonal flows the industry is accustomed to may well be a thing of the past, at least in 2021," Hyman said.
Non-majors also offered lower variable interest rates, with the median rate only sitting at 2.54% consistently since May. Variable rates among big banks, on the other hand, have moved up and down between 2.71% and 2.81% over the past year.
