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Majors to hold off on further changes to serviceability rates

ANZ, the Commonwealth Bank and NAB have revealed that they have no immediate plans to lower their serviceability rates further, despite Westpac’s decision to revise its interest rate floor for a second time. 

Earlier this week, Westpac Group announced that it would be revising its serviceability assessment rate (SAR) by lowering its interest rate floor from 5.75 per cent to 5.35 per cent, effective 30 September.

Speaking of the reduced floor rate, Westpac’s group general manager of home loans, Will Ranken, commented: “Westpac Group continually reviews its home loan products and services in line with market conditions and customer needs.

“Following careful consideration, we have decided to decrease the serviceability assessment floor rate from 5.75 per cent p.a. to 5.35 per cent p.a. for all Westpac Group brands.

“We are committed to helping customers into their homes, and this change may have a positive benefit for qualified borrowers looking to take out a loan for a property.”


The changes marked the second revision to Westpac's rate floor in a matter of months, and brings its floor rate in line with that of Macquarie, which previously had the lowest floor rate among the largest mortgage lenders.

The major bank initially announced that it would reduce its floor rate from 7.25 per cent in response to the Australian Prudential Regulation Authority’s decision to scrap its minimum floor rate of 7 per cent, which formed part of its mortgage lending guidance.

Westpac was among a host of lenders to revise its serviceability rates, with its big four peers, ANZ, the Commonwealth Bank of Australia (CBA) and NAB also amending their assessment policies.

ANZ and NAB lowered their floor rates to 5.5 per cent, while CBA dropped its floor rate to 5.75 per cent.  

However, the big banks won’t be following Westpac’s suit this time around, with ANZ, CBA and NAB each informing Mortgage Business that they have no immediate plans to lower their floor rates further.


Despite reluctance from three of the big four to make additional changes, further revisions could be on the way in the medium term if the gap between serviceability rates and mortgage rates widens.

The Reserve Bank of Australia is expected to lower the cash rate at least twice in the coming months, following on from its back-to-back reductions in June and July. 

[Related: Keystart revises serviceability rates]

Majors to hold off on further changes to serviceability rates

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