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Servicing test changes limited

Banks have made adjustments to serviceability tests since the Official Cash Rate cut in August, but advisers doubt whether the changes will have a big impact on pass rates.

Wednesday, October 9th 2019, 10:01AM

ANZ cut its servicing sensitivity rate from 7.25% to 6.9% in late August. In a note to advisers, the bank said it had listened to "survey feedback".

ANZ has also separated its loan affordability calculator, making it a standalone form. 

The change comes after the Reserve Bank cut the OCR by 0.5% in August, prompting home loan rates to fall to record lows. 

Regulatory changes have also made it easier for banks to ease servicing rates. Australian regulator APRA abolished its minimum 7% testing rate for banks in August. 

An ANZ spokeswoman said: "We review our servicing sensitivity rate (SSR) on a regular basis. We reduced our SSR following August’s Official Cash Rate (OCR), cut taking into account falling interest rates, the long-term OCR outlook and recent APRA requirements."

Meanwhile, ASB has changed the interest rate used to determine loan servicing of uncommitted monthly income from 7.7% to 7.2%. The bank said it had "listened to feedback" from advisers.

Stephen Wilton, an adviser at The Advice Group, says the changes have had a slight impact on pass rates for borrowers, but says allowances still make it tight for borrowers.

"For the most part, standard mum, dad, two kids deals are pretty much of a muchness over all banks ... It does seem like a lot of deals are looking much better in terms of a pass rate, although when it comes to investors (calculated on P & I), there's still a bit of a battle."

Glen McLeod of Edge Mortgages said bank serviceability rates still hovered around the 7% mark. He doubts whether serviceability rates will fall much further in the near term: "If you look where we are, that's almost double [compared to current home loan rates]. If you look at the Responsible Lending Code, do banks have much choice?"

 

 

Tags: ANZ APRA ASB Lending Mortgage Advisers mortgages OCR

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.55 3.89 3.99
AIA Special - 3.05 3.39 3.69
ANZ 4.44 3.29 3.45 3.85
ANZ Special - 2.79 2.95 3.35
ASB Bank 4.45 ▼3.35 ▼3.19 ▼3.85
ASB Bank Special - ▼2.85 ▼2.69 ▼3.35
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - ▼2.79 ▼2.69 ▼2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼3.39 ▼3.29 ▼3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 2.80 3.15 3.19
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.80 2.89 3.50
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC ▼4.40 ▼2.95 ▼2.95 ▲3.69
Kainga Ora 4.43 ▼3.29 ▼3.39 ▼3.85
Kiwibank 4.40 3.74 4.14 4.40
Kiwibank - Capped - - - -
Kiwibank - Offset 4.40 - - -
Kiwibank Special - ▼2.65 ▼2.79 ▼3.25
Liberty 5.69 - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society - - - -
Nelson Building Society 4.95 3.75 3.99 -
Pepper Essential 5.18 - 4.98 4.98
Resimac 3.49 3.45 3.39 3.69
RESIMAC Special - - - -
SBS Bank 4.54 4.85 5.05 5.49
SBS Bank Special - 2.99 3.05 3.69
The Co-operative Bank - Owner Occ 4.40 ▼2.79 ▼2.95 ▼3.39
The Co-operative Bank - Standard 4.40 ▼3.29 ▼3.45 ▼3.89
TSB Bank 5.34 3.59 ▼3.59 4.19
TSB Special 4.54 2.79 ▼2.79 3.39
Lender Flt 1yr 2yr 3yr
Wairarapa Building Society 4.99 3.95 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.79 ▼2.69 ▼2.79
Median 4.55 3.32 3.39 3.69

Last updated: 28 May 2020 10:38am

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