Three-month wait for loan approval reasonable in the circumstances

Categories:

Delays, Bank decisions, Lending,

Summary:

In October 2024, Hubert and Kara applied to top up their home loan by $18,000 to cover credit card debt, rates arrears and other costs. The application was approved in January 2025, but only after it was declined three times, according to Hubert. He said the process was marred by poor communication. He said they gave the bank all the information and documents it required at the outset, and so there was no reason for the approval to take so long. The delays, he said, caused unnecessary stress and inconvenience, and he sought $6,000 compensation for inconvenience.

Published:

July 2025

Our investigation

We found a five-week period during which the bank took no action on the application. The bank said it had agreed with Hubert and Kara that the application was not urgent because it had approved interest-only repayments on their home loan in November. However, we found no evidence of such an agreement.

We also found three months to be a reasonable timeframe to assess the application because Hubert kept increasing the amount of lending sought, and on the face of it, the application was in breach of its lending policy and required a manual review. The bank was within its rights to decline the application and was not obliged to approve it.