A surge in first-home buyer demand has led to significant mortgage processing delays across major Australian banks, as borrowers race to take advantage of the federal government’s expanded 5 per cent First Home Buyer Guarantee. As reported by the Australian Financial Review, the influx of applications has caused approval times to blow out sharply, with Commonwealth Bank (CBA) among the most affected.
Mortgage brokers say CBA’s service level agreement has stretched from four business days to as long as 16 days just for an application to be picked up, and even longer if additional documentation or rework is required. Some applicants are now facing more than five weeks before receiving an approval, a timeline that mirrors the typical six-week settlement period and puts purchase contracts at risk.
Industry experts attribute the delays to a “perfect storm” of factors. Earlier staffing reductions across assessment teams, the seasonal surge in end-of-year settlements, and the October expansion of the federal 5 per cent deposit scheme have combined to create heavy bottlenecks. With borrowers now able to avoid expensive lenders’ mortgage insurance, demand has soared, overwhelming processing pipelines at major and second-tier lenders.
While CBA has added weekend staff to help clear the backlog, brokers say that pre-approvals, especially through the bank’s Home Seeker channel, are where the longest delays persist. The bank recently changed its assessment process for these early-stage applications, contributing further to congestion. However, CBA maintains that completed applications tied to a specific property are still moving through within normal timeframes.
Other major lenders are also under pressure. NAB, Westpac and ANZ are reportedly experiencing longer turnaround times as first-home buyers flood the market. Westpac, which has seen scheme-related applications more than double since October, has acknowledged the strain and urged customers to be patient. Smaller and regional lenders offering competitive interest rates are facing similar challenges, with some, including Beyond Bank, pausing pre-approvals altogether due to overwhelming demand.
Compounding the delays are lending policies designed to help borrowers maximise their borrowing power. CBA, for example, allows owner-occupier applicants to add limited “boarder income” to their assessment and recently reduced buffer requirements for borrowers with HECS debts nearing repayment. Such flexible policies can draw additional applicants to specific banks, inflating their queues even further.
Brokers are now urging clients to begin the pre-approval process earlier, warning that traditional timelines can no longer be relied upon. While full approvals after signing a contract are still comparatively faster, early conditional approvals have become a bottleneck that can disrupt buying opportunities in a fast-moving property market.
With the 5 per cent deposit scheme continuing to fuel competition among lenders and buyers alike, the industry is calling for greater resourcing and more efficient processing frameworks to ensure aspiring homeowners aren’t disadvantaged by administrative delays.
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