Powered by MOMENTUM MEDIA
subscribe to our newsletter

Big four bank updates home lending policy

A major bank has revised its interest rate floor and buffer in response to APRA’s recent regulatory amendments.

Westpac Group has announced that it will reduce its interest rate floor for home loan serviceability assessments from 7.25 per cent to 5.75 per cent and increase its buffer from 2.25 per cent to 2.5 per cent.

The changes, which will be effective for new applications from Tuesday, 16 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.

This marks the second time Westpac announced revisions to its policy over the past month, after it sought to preemptively amend its guidelines before the reforms were finalised.

The bank had initially 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. 

Advertisement
Advertisement

PROMOTED CONTENT


Westpac has become the second big four bank to officially amend its serviceability policy, after ANZ announced last week that it would reduce its interest rate floor to 5.5 per cent and increase its buffer to 2.5 per cent.

The CBA and NAB have each told Mortgage Business that they’re currently in the process of reviewing their respective policies.

[Related: Major bank lowers serviceability floor]

Big four bank updates home lending policy
mortgagebusiness

Are you a new-to-industry broker in the process of growing your business? Then there’s some great news: The Adviser’s New Broker Academy is back in 2021 and will provide you with essential insights into cutting-edge tools, strategies and processes to fast-track to success. Don’t miss your chance to attend. To secure your FREE place, visit newbroker.com.au now!

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

Home ownership costs jumped by 130 per cent over two generations, with Gen X spending a quarter of their income servicing their loan, accord...

Fintech lender Tic:Toc has secured $25 billion of additional funding for the next seven years, after extending a partnership with Bendigo an...

The non-bank lender has closed its first RMBS deal under the Bluestone Prime program, worth $700 million. ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

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