Macquarie embeds CCR, revamps home lending process

Macquarie Bank has informed brokers that as of Thursday, 12 December, it will commence integrating comprehensive credit reporting (CCR) in its mortgage assessment process.

The announcement has coincided with the re-introduction of the CCR legislation in parliament. 

The lender noted that the CCR regime – which involves the sharing of a consumer’s positive and negative credit behaviour for home loans, credit cards and personal lending products – would provide it with greater insight into a borrower’s suitability for a loan.

Macquarie will have access to 24 months of data on a client’s credit history, which includes total limits, repayment histories and the number of facilities held by a borrower.

The bank has updated its credit policy to support the introduction of CCR.

The changes, also effective 12 December, include:

• no longer requiring brokers to provide statements for loans that are being refinanced, with the exception of “limited circumstances” where CCR information is not available;
• assessing loan serviceability based on the higher of credit report limits or those declared in the loan application; and
• reviewing repayment history of up to 24 months on all facilities in its credit assessment.

According to Macquarie, its CCR regime will help reduce inefficiencies in the application process and improve turnaround times by providing brokers with a “more accurate servicing position”.

Among the benefits of CCR touted by Macquarie are:

• broker access to limit, repayment type and loan term information;
• enabling brokers to make a complete submission with any credit limit or repayment history issues addressed upfront; and
• reducing the number of enquiries from Macquarie’s credit team.

This comes a week after the head of Macquarie Group’s Banking and Financial Services (BFS) division, Greg Ward, stressed the competitive utility of fast turnaround times in his appearance before the House of Representatives standing committee on economics.

Mr Ward was asked to identify the bank’s “competitive advantage” in the home lending space.

In response, Mr Ward pointed to the bank’s processing times, which the bank had identified as a key area for growth by internal research conducted by the bank.  

Mr Ward revealed that after investing in improving its mortgage business, Macquarie’s turnaround times far outpaced the market average.

“The average turnaround times in the industry, when we looked at this, was 25 days for formal approval on a mortgage – that uncertainty was extraordinary for customers and mortgage brokers,” he said.

“We invested $300 million in a core banking system and a mortgage origination platform to help us turn that approval around much quicker. 

“For a lot of our customers, formal approval happens within three to five days. It may happen on occasion if they have a complete application with all the relevant information that were required, [approval] can sometimes happen on the same day.”

Macquarie’s BFS head added that borrowers are willing to incur higher interest rates on their home loan for faster turnaround times.  

“What we’re told from customers, and we saw this from our empathy interviews, ‘I would rather pay a little bit more for the certainty and speed of turnaround than wait and not know’,” he said.

Mr Ward told the committee that based on Macquarie’s research, borrowers would be willing to pay up to 10 bps more for a home loan product for timely approval.

“We find if your equivalent product is more than 10 bps more expensive than a bunch of other providers, then the customer is starting to think, ‘Maybe I should shop around’,” Mr Ward said.

According to Mr Ward, Macquarie’s investment in faster turnaround times has partly led to a sharp increase in its share of new mortgages settled in Australia.

“Our current share of the mortgage market is 2.3 per cent, but our share of current flow of new business [from the broker channel] is about 12 per cent, so we are growing very fast, and I think it’s that we are the best in market in terms of turnaround times for a mortgage approval,” he said.

[Related: Lender hikes rates to improve processing times]