Powered by MOMENTUM MEDIA
subscribe to our newsletter

Major bank lowers serviceability floor

A big four bank has updated its home loan serviceability assessment policy in response to APRA’s regulatory amendments.

ANZ has announced that it will reduce its interest rate floor for home loan serviceability assessments from 7.25 per cent to 5.5 per cent and increase its sensitivity buffer from 2.25 per cent to 2.5 per cent.

The changes, which will be effective for new applications from Monday, 15 July, have come in response to the Australian Prudential Regulation Authority’s (APRA) decision to scrap its 7 per cent interest floor and raise its buffer to 2.5 per cent.

ANZ is the first major lender to implement changes. However, the Commonwealth Bank of Australia (CBA), NAB and Westpac have each told Mortgage Business that they’re currently in the process of reviewing their policies.

A CBA spokesperson welcomed the regulatory changes, stating: “We support APRA’s decision to update its guidance relating to serviceability assessment rates.

Advertisement
Advertisement

“We worked closely with APRA throughout their consultation period. We are now reviewing our serviceability rates based on the new guidance while taking into consideration our portfolio mix and risk appetite.”

A NAB spokesperson also welcomed the updated guidance, adding that “now is the right time” given the “low interest rate environment”.

“We consider all lending applications on a case-by-case basis and are committed to lending responsibly,” the NAB spokesperson stated.

“Serviceability is assessed on a number of factors to ensure customers can make repayments both now and into the future.”

Westpac also noted the benefits of the updated guidance, stating that it would assist borrowers into home ownership.

PROMOTED CONTENT


A spokesperson added: “We are reviewing our serviceability requirements and continuing to consult with APRA with a view to implementing the guidance.”

Last month, Westpac preemptively revised its mortgage serviceability assessment guidelines before the reforms were finalised.

The bank announced that it would allow its credit officers to use their discretion when assessing low-risk home loan applications that did not pass the serviceability test, but reversed its decision after holding discussions with APRA. 

[Related: APRA finalises mortgage lending reforms]

Major bank lowers serviceability floor
mortgagebusiness

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

Lenders have begun offering disaster relief packages for customers impacted by Tropical Cyclone Seroja in Western Australia. ...

Boutique lender Apickle has launched new finance product for SMEs using eftpos that enable them to borrow up to $200,000 without an asset se...

The federal government said it is pleased that higher confidence levels have led to a strong housing market but said that it is “keeping a...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: Tackling the home deposit challenge

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.