About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Friday, October 18th, 4:57PM
rss
Latest Headlines

Tough servicing rates could be eased

The end of tough loan servicing tests could be a step closer after the Australian Prudential Regulation Authority relaxed serviceability rules for Australian lenders.

Wednesday, July 24th 2019, 10:49AM

Earlier this month APRA removed its "serviceability buffer", which forced Aussie lenders to assess loans at a minimum interest rate of 7%. 

Australian banks have begun to act. Westpac and ANZ have cut serviceability rates in Australia from 7% to about 5.5%-5.7% since the APRA move.

The development has sparked speculation New Zealand banks could also lower serviceability tests. Another fall in the Official Cash Rate could also prompt a rethink.

New Zealand advisers have become frustrated by tough servicing tests enforced by the Australian-owned big four. While the Reserve Bank of New Zealand has no rules on serviceability, advisers believe the big four have been influenced by APRA's old guidelines.

Tony Alexander, chief economist at BNZ, believes the Australian developments could be a knock-on effect for New Zealand lenders.

"When there are changes in Australia, similar things happen in New Zealand. People are running into debt servicing issues at rates of about 8%, at a time when rates are continuing to fall, and could all further," Alexander said. "I wouldn't be surprised to see eventual changes here."

Alexander says serviceability changes could see "more people become eligible for financing" and could help to balance out headwinds to house price growth, such as reduced migration and ringfencing. 

Advisers are optimistic the serviceability changes will be echoed here. 

Stephen Wilton of The Advice Group, said he was "hopeful" and "expecting".

Wilton added: "We even have clients who are aware of it and we have a long list of deals waiting to be re-looked at."

Kris Pedersen, managing director of Kris Pedersen Mortgages, believes it is "hard to say" whether the APRA rule change will impact New Zealand.  Pedersen said domestic banks, and not just Aussie-owned lenders, had enforced tough servicing tests in recent years.

Pedersen added some customers would still face difficulties passing the banks' hurdles for a home loan.

"If they do [cut serviceability rates], it is mainly going to benefit larger investors when comparing things to a year or so back. For home owners or smaller investors the increase in living expenses will offset much of the benefit of the lower qualifying rate," Pedersen added.

 

Tags: ANZ BNZ Reserve Bank Westpac

« Changes at Loan Market and NZFSGInvestor lending flat in June »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 ▼4.05 ▼3.95 4.49
ANZ Special - ▼3.55 ▼3.45 3.99
ASB Bank 5.20 ▼4.05 ▼3.95 4.39
ASB Bank Special - ▼3.55 ▼3.45 3.89
BNZ - Classic - ▼3.55 ▼3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
Housing NZ Corp 5.19 4.15 4.09 4.39
HSBC Premier 5.24 3.35 3.35 3.35
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kiwibank 5.80 4.30 4.24 4.74
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.49 3.99
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.69 4.79 -
Resimac 4.50 4.86 3.89 3.94
Lender Flt 1yr 2yr 3yr
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.65 3.59 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.49 4.39 4.85
TSB Special 5.29 3.69 3.59 4.05
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.34 - - -
Westpac Special - ▼3.55 ▼3.45 3.99
Median 5.34 4.05 3.95 4.05

Last updated: 18 October 2019 9:00am

News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com