The Auckland housing market seems to be waking from its slumber and it seems that buyers are eager to get in on the action as quickly as possible.
Earlier this week, Squirrel’s CEO, John Bolton, was quoted in The Mortgage Magazine saying, “the market has sprung back to life, and we’re seeing a lot more 95% LVR (loan-to-value ratio) stuff.” This means that more and more people can enter the market or secure finance than ever before due to the lessening in conditions around the deposit requirement. However, the downside of that is it is creating more work for the banks with compliance and paperwork, and they're just not set up to handle the increase in applications. This is causing a slow turnaround time for approvals.
Bolton also said that "banks are understaffed, especially with their broker unit, which is causing a delay in applications to 1-2 weeks". A standard turnaround time should be around 3-4 working days. 1-2 weeks is definitely a "nightmare" situation, especially for first home buyers looking to compete in a hot market."
Those hoping to purchase their first home are feeling the effect of FOMO (fear of missing out). Bolton added, that "people are in a mad panic trying to put cash offers in on houses so are very impatient trying to get quick answers. So it's a bit of a perfect storm. We are stuck in the middle, trying to manage clients' unrealistic expectations with the slow turnaround."
So what is the solution going forward? Bolton suggested that banks need to look at advancing their level of technology. He says "technology should ultimately play a bigger role. There's still a lot of double-handling of applications going into the banks. There's a big opportunity for us to standardise forms and make things better for everyone. Our industry and the banks need to solve this together."
The original article from TMM can be viewed here.