Credit:<\/span>Louie Douvis<\/cite><\/p>\nAt a market briefing on technology, King will announce Westpac plans to launch a new process in the last quarter of this year, which it says will allow some customers to refinance through an automated system. Initially, the offer will be open only to individual borrowers who are refinancing an owner-occupied loan, have 20 per cent equity in the property, and earn a PAYG income.<\/p>\n
By using data analytics to perform identity checks and credit assessments, the bank says it will be able to unconditionally approve some simple loan applications in 10 minutes. It plans to roll out the offer to a wider range of customers next year.<\/p>\n
King predicted that over time, customers were likely to become more comfortable taking out a mortgage without talking to a person – though he said more complex cases would still require talking to a human.<\/p>\n
\u201cIn other markets overseas, there\u2019s just a lot more mortgages that are done without interacting with people. As people feel more comfortable with the [digital] processes, they\u2019ll just trust them and use them,\u201d King said. \u201cAs a bank in the digital world, you will need this capability.\u201d<\/p>\n
Opal Capital portfolio manager Omkar Joshi said online loans made sense to some extent, but he was unsure how many loans ultimately would be able to be approved automatically, rather with human involvement.<\/p>\n
\u201cAny loan that is slightly out of the ordinary will still have to have human intervention,\u201d Joshi said.<\/p>\n
King said Westpac had brought forward the change because rising interest rates could prompt borrowers to shop around for better deals.<\/p>\n
\u201cInterest rates are no longer falling, they\u2019re going up. Customers are considering the cost of their banking, including their mortgage, and we see that refinance will be an important part of the market over the next couple of years,\u201d King said.<\/p>\n
RateCity reported this month that owner-occupied refinancing had hit a record high in May, as customers responded to rate rises by switching their lender.<\/p>\n
Key rivals of Westpac have made broadly similar moves into digital home loans. Commonwealth Bank launched a digital home loan in May, ANZ in March said it aimed to launch a digital home loan next year, and National Australia Bank has adopted a new system allowing bankers and brokers to write loans faster.<\/p>\n
Westpac, which in recent years lost market share because of loan approval problems, is taking a slightly different approach to ANZ and CBA, which have both announced plans to launch new digital lending products. King said Westpac was changing the bank\u2019s main process for mortgages, meaning the faster approval times could eventually be rolled out more widely, including to loans written by mortgage brokers.<\/p>\n
Markets bet that the Reserve Bank will raise interest rates again next week, after jacking up the cash rate from 0.1 per cent to 1.35 per cent since May.
<\/b><\/p>\n
King said the bank\u2019s data on loan delinquencies and customer stress was better than three months earlier, and hardship calls had not really increased.<\/p>\n
\u201cAll the end of June information is credit is better than it was at the half year of March,\u201d he said. \u201cThe one message I would have for customers is if they are having any challenges, call us early.\u201c<\/p>\n
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