Lenders continue easing serviceability policies

Teachers Mutual Bank Ltd (TMBL) and wholesale funder Advantedge are the latest credit providers to revise their home loan serviceability assessment policies.

The changes come in response to the Australian Prudential Regulation Authority’s (APRA) changes to its home lending guidance, in which it scrapped the 7 per cent interest rate floor for mortgage assessments and increased the buffer rate to 2.5 per cent.

TMB – which includes Firefighters Mutual Bank, UniBank and Health Professionals Bank – has lowered its interest rate floor from 7.25 per cent to 5.5 per cent and increased its buffer rate to 2.5 per cent.

The changes are effective for all new home loan applications from Friday, 26 July.

In a statement, TMB’s head of third-party distribution, Mark Middleton, commented: “TMBL welcomes the revised APRA guidance that allow us to continue to focus on supporting both our existing and future members as well as key workers and their families.”

NAB-owned wholesale funder Advantedge has also reduced its interest rate floor to 5.5 per cent – matching its parent company – and has increased its rate buffer to 2.5 per cent.

Advantedge’s changes will be effective for all new home loan customers from Monday, 5 August.

TMB and Advantedge join the likes of ANZ, Westpac, the Commonwealth Bank, NAB, Macquarie, Suncorp, MyState Bank, Bendigo and Adelaide Bank, the Bank of Sydney and Auswide Bank, who dropped their interest rate floors to as low at 5.3 per cent.

All the aforementioned lenders have also increased their buffer rates to 2.5 per cent, as per APRA’s guidance.

Other lenders are expected to follow suit, including non-banks, with Resimac, which, along with the rest of the non-bank sector, is not formally bound by APRA’s guidance, also confirming that it is reviewing its policy.

[Related: Banks continue revising mortgage serviceability policies]