A memo obtained by the Herald Sun shows NAB's processing systems have buckled under the weight of increased demand for its variable rate mortgages in the past month.

Leading broker group AFG last week warned its member brokers not to rely on NAB for urgent mortgage applications because its mortgage centre was running at full capacity.

In a memo entitled "Urgent message: Re NAB/HomeSide" sent by AFG relationship manager Krystle Bischkopf last Wednesday, AFG brokers were advised to consider other lenders such as ANZ and St George because of the processing delays at NAB.

"Please be advised that we are receiving quite a number of escalations from brokers who are having issues with turnaround times with NAB, and we were not having many good results," Ms Bischkopf told brokers in the memo.

"We have been advised that they are almost at full capacity.

"If you have a deal which is urgent, ie a purchase, please consider one of the other lenders before placing the deal."

The memo then estimated how long it took banks to process loan applications via brokers. The memo claimed Westpac had the fastest turnaround time at 24 hours. St George was the next best (up to 2 working days), followed by CBA (up to 3 days) and ANZ (4 days).

AFG is one the country's largest mortgage origination groups with more than 2500 affiliated brokers.

AFG chief operating officer Mark Hewitt told BusinessDaily NAB had been upfront about the processing problems.

"They have been very open and transparent about it," he said.

"They have told us that for customers requiring urgent loan approvals that our brokers should look elsewhere because they are suffering processing problems."

NAB spokeswoman Luisa Ford acknowledged NAB had experienced processing issues but said more staff had been hired to help ease the extra workloads caused by higher demand from brokers.

"We do not dispute that we have had a technology issue. We've been extremely up-front about that," she said.

"It is important to note we immediately took all sorts of precautions to ensure our brokers' expectations were managed and that we could continue delivering to meet demand."

NAB moved aggressively in early December to boost its share of the home loan market by re-pricing its standard variable rate mortgage to 6.49 per cent -- the cheapest among the four major banks.

It also markets mortgages under the HomeSide brand through brokers such as AFG and Mortgage Choice.

Homeside's variable mortgage is 6.02 per cent and demand for the product soared this year after Westpac withdrew its RAMS product from the broker market.

Ms Ford said NAB had kept mortgage brokers informed about anticipated turnaround times since late January and always displayed current information on turnaround times on its website.

"A technology issue was identified in January. We took steps to minimise any impacts to brokers and as a result have kept up with demand and our processing times are being maintained within industry standards," she said.

" In the first two weeks of February we experienced an 80 per cent increase in applications for HomeSide compared to three months ago -- demonstrating that brokers are still seeing the value of recommending NAB to their customers."

ANZ's new head of retail banking, Phil Chronican, last month conceded his bank had also experienced problems processing loan applications from brokers.

"The system is not yet where I want it to be, but we will certainly be there within a month or two," he said.

Data published by the Australian Prudential Regulation Authority showed NAB in January increased its home lending portfolio by $600 million to $141.1 billion.

Westpac including its St George subsidiary had the fastest rate of growth, boosting the size of its mortgage book by $3 billion to almost $250 billion.

Source: news.com.au