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ANZ eases servicing test

ANZ has become the latest bank to ease its servicing test criteria for borrowers, reflecting the lower interest rate environment.

Tuesday, August 4th 2020, 9:57AM

by Dan Dunkley

ANZ New Zealand has contacted advisers to say it will test new home loan borrowers at about 5.8% instead of its old rate of roughly 6.65%.

The move reflects the low rate environment as banks slash home loan interest in the wake of the Covid-19 pandemic.

While low interest rates have made home loans more affordable to borrowers following the Covid-lockdown, economists say tough servicing tests have hampered market activity. Market commentators including Tony Alexander have pointed to "apparent bank reluctance to ease servicing criteria".

Mortgage advisers have long called for banks to slash servicing test rates, calling them unrealistic and out of step with real interest rates under 3% across the banking sector.

ANZ currently offers a two-year loan at 2.69% and one year rate at 2.55%.

One adviser told landlords.co.nz's sister publication, TMM Online, that the new test rate could help borrowers to get about 10% more from ANZ, and welcomed the relaxed rules.

"It will make a big difference for clients and for someone borrowing about $500,000, they would be be able to get an extra $50,000. It's definitely more realistic."

However, one adviser noted ANZ had also changed its expenses calculations for borrowers, a move likely to work against borrowers. The adviser said this would negate some of the effect from the lower test rate.

ANZ did not respond to a request for comment.

The bank's move comes after ASB slashed its servicing test rate to about 6.45% last month.

Like ANZ, ASB adjusted its expenses calculator to make some items more expensive, offsetting some of the benefit of the lower test rate.

Advisers hope BNZ and Westpac will also adjust their servicing tests to bring them closer in line with real interest rates.

"It's been a lot easier to deal with ASB over the past month because of their changes, and hopefully the other two big banks will also make changes," one adviser told TMM.

Read more: 

ASB eases servicing criteria

Tags: ANZ ASB banks housing market investment Lending mortgages property investment Tony Alexander

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
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 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 3.85 3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 ▼2.45 2.65 2.79
Kainga Ora 4.43 2.93 3.07 3.24
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 3.05 3.19 3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.55 2.69 2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.15 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.00 3.13 3.02

Last updated: 21 September 2020 10:48am

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