In case you’re wondering what's taking so long for your mortgage approval, here’s why.
Lenders are busy. And when I say busy, I mean deluged. Some are struggling to approve at least twice as many applicants as normal.
“We’re doing volume that is 100% greater year-over-year,” John Webster, who runs Scotiabank’s mortgage business, told VERICO mortgage brokers on Thursday.
Webster characterized this mortgage market as a "once-in-a-lifetime experience" and added that, “…application flows [are] up over 200%."
When that happens, approval times suffer. Instead of a 24- or 48-hour turnaround, some mortgage applicants are seeing approvals come back in 4-5 days or more—sometimes a lot more. There are actually some credit unions quoting over three-week lead times. And some of the biggest credit unions have had to cut off refinance business from brokers altogether in order to reduce their application queues.
One big reason for the bottleneck is that, as Webster notes, “no one had staffed up” ahead of this surge. That’s because virtually no one expected this kind of volume coming off a global pandemic with nationwide lockdowns.
As a borrower, this means two things:
- You’ll need to allow plenty of time for financing in your purchase agreement, especially if your lender’s mortgage rate is rock-bottom (the lower a lender’s rate, the busier they usually are), and
- You’ll want to get pre-approved ahead of time if you’re purchasing with a mortgage.
A pre-approval gets your application into the lender’s system so that it just needs a quick update, document review and appraisal, to get final approval.
If you choose a lender that reviews your documents during the pre-approval process (most don’t), and one that does automated valuations, that can speed things up as well.
All of this is something to keep in mind if:
- you’re bidding on a home
- you need to insert a financing condition in the contract, and
- you want to present the most appealing offer you can.
Keeping your financing condition timeframe to the typical five business days (instead of 7 to 10) makes your offer more appealing to the seller. For those in a multiple-offer situation, every edge counts.