Non-bank lender Resimac has responded to the Australian Prudential Regulation Authority’s (APRA) changes to its home lending guidance, despite not officially being bound by its standards, which apply to authorised deposit-taking institutions (ADIs).
Resimac has lowered its interest rate floor from 7.25 per cent to 5.75 per cent and increased its buffer from 2 per cent to 2.5 per cent.
The changes are effective for new applications submitted for Resimac Prime products from Thursday, 1 August.
The non-bank has noted that the changes will not apply to Resimac Specialist loans, which will continue to be assessed at the higher of either a floor rate of 7.25 per cent or a buffer rate of 2 per cent.
Resimac is among the first non-bank lenders to announce changes to its assessment rates following APRA’s announcement, with several ADIs, including ANZ, Westpac, the Commonwealth Bank, NAB, Macquarie, Suncorp, MyState Bank, Bendigo and Adelaide Bank, the Bank of Sydney, Auswide Bank, Teachers Mutual Bank, Advantedge, Bankwest and Heritage Bank, reducing their floor rates to as low as 5.3 per cent.
All the aforementioned lenders have also increased their buffer rates to 2.5 per cent, as per APRA’s guidance.
In addition to revising to its assessment rates, Resimac has announced that it will be reducing its reliance on some income types.
Also effective from 1 August, Resimac will accept 80 per cent (down from 100 per cent) of the following income types under its Resimac Prime products:
- Overtime, irrespective of employment/occupation type
- Shift allowances and penalties
- Bonus and commission income
- Casual employment and second jobs
- Investment income (rent, dividends and interest)
- Maintenance and child support
However, Resimac will continue to accept 100 per cent of family tax benefit A & B (if payable for the next five years) and any ongoing permanent pensions (as a secondary income source).
The non-bank will also continue accepting 100 per cent of the aforementioned income types for Resimac Specialist applications.