Processing times are increasing across several lenders, with institutions like Commonwealth Bank now taking up to 16 business days just to begin assessing some applications. This is four times longer than the usual wait. The spike in demand follows the October expansion of a federal scheme that allows eligible buyers to purchase property with only a 5% deposit and no lenders’ mortgage insurance. As many banks had recently reduced the size of their assessment teams, the increase in applications has created bottlenecks.
The scheme was introduced to boost access to homeownership and has seen high uptake, particularly in the lead-up to the holiday season which is typically the busiest period for property settlements. Brokers say that while the offer is attractive, extended approval times may cause buyers to miss out on opportunities. In some cases, approvals are now taking longer than five weeks, nearly matching the duration of a standard home sale contract.
Some banks are adjusting internal policies to manage the increased workload. One lender, for example, now accepts additional income sources such as rent from boarders to help borrowers increase their borrowing capacity. However, even fully completed applications with all required documents are now experiencing delays despite assurances that services are running normally.
This surge in applications highlights strong demand driven by government support but also reveals limitations in banks’ ability to process loans quickly. Smaller banks are scaling back, with one regional lender suspending all pre-approvals while others are adding staff after hours to keep up. The success of the deposit scheme could unintentionally slow down homebuyers, depending on the capacity of their chosen lender.
