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ASB, Westpac tweak servicing tests

Two of the biggest banks in New Zealand have made adjustments to their loan servicing criteria in recent weeks, amid toughening conditions for loan applicants

Friday, June 8th 2018, 12:09PM

by Dan Dunkley

ASB has increased the minimum average expenses on a range of costs used to work out the amount of free cash a potential borrower has each month.

Minimum expenses per adult have increased from $600 to $610 per month. The minimum expense on rates has risen from $170 to $185 a month. While the minimum expense for utilities has risen from $265 to $275 a month, and insurance is up from $85 to $90.

The increases will slightly reduce the amount of surplus income for loan applicants. ASB told advisers about the changes on June 1.

It comes against a backdrop of New Zealand’s major banks making internal changes to tighten lending. Adviser says lenders have made servicing assessments, or “stress tests”, more difficult.

Westpac, meanwhile, has also made some tweaks to its loan servicing criteria. A spokeswoman said Westpac changed its servicing test last month to focus on “applicants’ cash surplus after all commitments are met” and has introduced additional assessments and verification requirements. The bank has also introduced an allowance for credit card limits and the “definition of other discretionary living expenses”, the spokeswoman said.

Advisers say Westpac is imposing a “stretch test” on applicants, including property investors, testing their finances on a notional interest rate of 7.25%. Westpac says the 7.25% notional rate has been “included in the assessment process since mid-2016”.

Westpac is also testing investors applying for interest-only loans on a principal and interest basis, two advisers said.

Tags: ASB Westpac

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Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.95 3.29
ANZ 4.44 3.10 3.50 3.84
ANZ Blueprint to Build 1.68 - - -
ANZ Special - 2.50 2.90 3.24
ASB Back My Build 1.79 - - -
ASB Bank 4.45 2.55 2.95 3.29
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.55 2.95 3.25
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.55 3.15 3.22 3.85
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 1.95 1.85 2.35 2.45
Heretaunga Building Society 4.99 3.80 3.90 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 2.15 2.35 2.75
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.75 3.34 3.34 4.14
Kiwibank - Offset 3.75 - - -
Kiwibank Special 3.75 2.49 2.49 3.29
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
Lender Flt 1yr 2yr 3yr
Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 2.69 2.99 3.29
SBS Bank Special - 2.19 2.49 2.79
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.29 - -
The Co-operative Bank - Owner Occ 4.40 2.49 2.89 3.19
The Co-operative Bank - Standard 4.40 2.99 3.39 3.69
TSB Bank 5.34 3.30 3.69 4.04
TSB Special 4.54 2.50 2.89 3.24
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.59 3.15 3.49 3.89
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.89 3.29
Median 4.54 2.68 2.99 3.29

Last updated: 19 July 2021 9:09am

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