Home loan applications are taking longer than ever to process, creating uncertainty for borrowers at critical moments in their property purchases
Mortgage advisers have been facing serious delays in bank processing times, and the Finance and Mortgage Advisers Association New Zealand (FAMNZ) wants banks to introduce clear service level agreements to address the problem.
The delays are creating pressure and uncertainty for clients at critical moments in the home loan process, with consumer choice being compromised by inconsistent service levels across different banking channels.
"Turnaround times are a serious and ongoing challenge – for advisers and especially for their clients," said Leigh Hodgetts, country manager at FAMNZ. "FAMNZ members are consistently reporting delays of 7–10 days on average, and even longer for complex applications. These delays are adding pressure and uncertainty at critical moments in the home loan process."
The situation is compounded by disparities between adviser-submitted applications and those lodged directly through bank branches.
"Advisers and their clients are often subject to different internal processes than those who go directly to a branch, and that can mean slower turnaround times," Hodgetts said. While banks have acknowledged the issue and are investing in automation, staffing, and process improvements, achieving parity across all channels remains elusive.
Capacity issues and CCCFA hangover blamed
The primary drivers behind the extended wait times appear to be capacity and capability constraints within banks. Many lenders have been bringing on new staff, creating training challenges that affect service delivery.
"Banks have been onboarding new staff, which is encouraging, but there's a natural learning curve that comes with training and upskilling," Hodgetts said. "Inexperienced teams are contributing to slower response times, asking more questions or requiring rework that resets the waiting time for an outcome."
The industry is also still grappling with legacy effects from Credit Contracts and Consumer Finance Act changes, which introduced more prescriptive deal assessments.
Adding to the complexity are inconsistencies between different lenders' requirements. "We're also still seeing the effects of overly prescriptive deal assessments – a hangover from the CCCFA changes. FAMNZ is calling for fewer forms and a more standardised approach across lenders to improve efficiency," Hodgetts said. "The current inconsistencies between banks add complexity and unnecessary duplication, which only slows the process down further."
The frustration is mounting within the adviser community, with questions about how long the current situation will persist.
"Advisers are asking, how long will this take? Frankly, we're running out of runway," Hodgetts said. "These delays are having real-world impacts on borrowers, and the need for timely, accurate service has never been more important."
Industry seeks service level agreements
FAMNZ is pushing for the introduction of clear service level agreements between banks and advisers, arguing that such standards are commonplace in most business partnerships. The organisation maintains regular contact with banks through business development managers and third-party banking leaders, with issues being escalated and feedback helping banks identify problem areas.
However, despite constructive discussions and good intentions from lenders, the necessary improvements have yet to materialise. "While the intent is there, we're not yet seeing the shift we need," Hodgetts said. "Advisers and lenders must operate in sync - and right now, that alignment still feels out of reach."
The solution, according to FAMNZ, lies in banks continuing to invest in training, resourcing, and consistent service models across all channels, while being more responsive to feedback in time-sensitive situations.
"What advisers are asking for isn't unreasonable: clear expectations, reliable processing timeframes, and a genuine partnership approach," Hodgetts said. "We want to work together to deliver the best outcomes for New Zealand borrowers. That's a shared goal – and one we believe the industry can achieve.”
