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.
“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.
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]
Charbel Kadib is a journalist on the mortgages titles at Momentum Media.
Before joining the team in 2017, Charbel held roles with public relations agency Fifty Acres, and the Department of Communications and the Arts.
Charbel graduated from the University of Notre Dame Australia with a Bachelor of Arts (Politics & Journalism).