Money: Australian banks begin lowering mortgage stress test rates - - PressFrom - Australia
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MoneyAustralian banks begin lowering mortgage stress test rates

04:45  17 july  2019
04:45  17 july  2019 Source:   reuters.com

ANZ, NAB first to cut savings rates again

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SYDNEY (Reuters) - Westpac Banking Corp (AX:WBC) and Australia and New Zealand Banking Group (AX:ANZ) are starting to lower the interest rate they use to stress test customers' loan applications, a move expected to help stabilize house prices. The banks are the first two of the Big

Westpac Banking Corp and Australia and New Zealand Banking Group are starting to lower the interest rate they use to stress test The banks are the first two of the Big Four lenders dominating Australia ’s banking system to implement the loosening of mortgage lending rules, introduced by the.

Australian banks begin lowering mortgage stress test rates© Reuters/Edgar Su FILE PHOTO: A man walks past a Westpac bank branch in Sydney, Australia

Westpac Banking Corp and Australia and New Zealand Banking Group are starting to lower the interest rate they use to stress test customers' loan applications, a move expected to help stabilise house prices.

The banks are the first two of the Big Four lenders dominating Australia's banking system to implement the loosening of mortgage lending rules, introduced by the prudential regulator earlier this week.

From Tuesday, Westpac now assesses the serviceability capacity of its customers using the lower of 2.5% over its lending rate, or a minimum 5.75% floor test, according to its website.

When Alison wanted to refinance her loan in her 50s, she believes she was knocked back due to her age

When Alison wanted to refinance her loan in her 50s, she believes she was knocked back due to her age When Alison's marriage broke down when she was in her 50s she believes her bank declined her application to refinance a home loan due to her age, but advocates say older Australians hold "substantial wealth".

Westpac Banking Corp and Australia and New Zealand Banking Group are starting to lower the interest rate they use to stress tests The banks are the first two of the Big Four lenders dominating Australia ’s banking system to implement the loosening of mortgage lending rules, introduced by the

Westpac Banking Corp and Australia and New Zealand Banking Group are starting to lower the interest rate they use to stress test customers' loan applications, a move expected to That compares with a 7.25% minimum testing rate the banks used before the regulator removed the mandated floor.

That compares with a 7.25% minimum testing rate the banks used before the regulator removed the mandated floor.

Australian banks begin lowering mortgage stress test rates© Reuters/Steven Saphore FILE PHOTO: A woman looks at her mobile phone outside a branch of the ANZ Bank in Sydney The Australian Prudential Regulation Authority (APRA) earlier this month scrapped the minimum testing rate as it added to the stimulatory tools being deployed to revive the country's sluggish economy.

ANZ told clients on Friday that its new floor rate for retail lending would fall to 5.50% from Monday, according to a marketing memo seen by Reuters.

A spokeswoman for Commonwealth Bank of Australia said the bank was in the process of reviewing its own testing rate, while representatives from National Australia Bank did not return an emailed request for comment.

Following a protracted property downturn, the Reserve Bank of Australia (RBA) on Tuesday said house prices were now stabilising and APRA's credit easing measure was "likely to see a boost in borrowing capacity for many new borrowers", its July policy meeting minutes showed.

The central bank, however, said it does not expect a material pick-up in borrowing.

The move means that borrowers applying for home loans carrying variable loan rates of about 3.5% will now be tested on their ability to repay a loan carrying 6% interest - that is 1.5 percentage points lower than before.

According to analysts, every 1% drop lets home buyers borrow up to 10% more.

The spring season in the housing market would be a key litmus test for whether the changes have worked, Royal Bank of Canada said in a note to clients.

Read more

CBA, ANZ cut fixed home loan rates as borrowing costs drop.
Commonwealth Bank is slicing interest rates on its fixed-rate home loans, as banks compete to sign up customers prepared to lock in their borrowing costs.

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