Imagine waiting for a bank to approve your loan and then getting it (in-principle) but being made to wait up to 3-4 weeks or longer to get it approved in writing. This is not happenning to me but I am sure is happening to a lot of people out there at the time of GFC (Global Financial Crises) in Australia. Do let me know if you have the same sad tale.
I am not much of an expert at the world of financial instruments but If you applied for a loan in days gone by, banks (in Australia) would review your net worth and paying power, if you are working full time(a plus) your loan would be approved in no time(1-2 weeks). The banks valuer would then drive down to the house that you are seeking to buy or build and see that indeed there is a house and land on the said site. The valuer would then reply to bank with a valuation most likely compared to the councils valuation. The banks I would assume would then do their final checks and balances (100 points) perhaps and approve the loan. A fairly straight forward process.
Well with the GFC this does not seem to be so anymore as all banks are now overly cautious in approving loans it would seem. I have been told that most of the big 4 in Australia are very slow in granting written approval although they have stated in principle approval to a customer. The catch comes when they now send their valuer. Yes blame the valuer. For one sale it is now 3 weeks and getting longer since the bank in question(Commonwealth Bank – I believe) said yes to the approval but has to wait for the valuation(still not done) before it grants written approval. The other banks are no better with NAB taking just as long but in a shorter time frame.
There are plenty of buyers out there I understand and from what I see on the news each night the property market is doing very well. In some areas better than average. Now if these buyers(first home or otherwise) hit a snag (banks taking a long time to grant written approval to a loan) will that not drive the market down. Lending then becomes difficult as buyers and sellers either quit the process or hold on until approval which can take anywhere from 1 to several weeks. They cannot it seems give you a date for that approval to come through. It can thus takes weeks if not months to approve a loan.
So what happens to the 60 days in which the loan process is to complete within? Does this now become 90 days or 120 days? What I would like to know is you have a buyer who is in a stable job and is able to meet all loan repayments why are the banks hemming and hawing in approving the loan?
If they need to do a 200 points check I can understand. If they are cautious, that is good, but surely the process can be no different from before. If anything there are fewer buyers than before to process hence less work for the banks. Ahh! but maybe the banks have less staff to process the loan as well having had a staff strenght evaluation exercise. Which ever way you look at it the banks are frustrating the buyers and sellers and damaging the property market I believe. Will this add us getting out of a recession? I think not. What do you think. Tell me you tale.