Teachers Mutual chalks up 300 per cent increase in mortgage deals

Teachers Mutual Bank, one of the nation’s largest mutuals, has had an “extraordinary” 300 per cent increase in mortgage applications for new loans and refinancing in the past four weeks.

Chief executive Steve James attributed the spike to most of the bank’s clients working in secure employment sectors such as teaching, emergency services and nursing.

"They have been going strongly during the COVID-19 period," Mr James said.

He said the mutual's staff would be working overtime to deal with the rise in applications that has caused initial assessment of loans to increase to about 12 business days. Some of the major lenders are taking up to eight weeks.

About 52 per cent of the loan applications are new loans, mostly owner-occupier, with the remainder refinancing.

The mutual, a company owned by its members not by shareholders, is one of the nation's largest with 200,000 members and assets of more than $7 billion, began streamlining loan applications on Monday to expedite approval.

For example, most loan applicants will have to locate a property to purchase before a full credit assessment of owner-occupied or investment loans can proceed.

The mutual described the increase as "extraordinary" in a note to mortgage brokers setting out the new procedures. The number of mortgages being processed was not available.

Mr James said about one-in-four loans were for investors.

The mutual offers the lowest rates for interest-only investors over one, two and three years, according to Canstar, which monitors rates.

ANZ and Westpac are also experiencing delays because of a surge in refinancing applications and processing problems caused by pandemic-related staffing issues.

Westpac Group is dealing with extended delays because offshore operations have been affected by COVID-19.

Record numbers of borrowers have been refinancing with all banks and mutuals as fixed and variable rates slip to new lows.

Households have also been attempting to improve their cash flow by using generous cash backs from refinance deals to pay break costs on existing fixed rates then lock into lower rates for two or three years.

ANZ last week increased a popular two-year rate by 10 basis points and reduced its cash-back offer in a bid to cool demand and reduce the loan application queue.

Teachers Mutual recently axed off-the-plan mortgages in response to the “high uncertainty of future valuations” caused by falling demand and lower prices.

The number of apartments settling with a valuation lower than the original price tops 55 per cent in Sydney and nearly half in Melbourne.