(National Australia Bank), one of the 4 major banks in Australia, has updated
its mortgage serviceability assessment policy.
amendment is in response to APRA’s (Australian Prudential Regulation Authority)
changes to its home lending guidance earlier this month which allowed banks
greater flexibility to set their testing rates after scrapping a minimum of 7%
interest for loan applications by up to 2.5%.
easing credit conditions, it is intended to boost the borrowing capacity of
many new customers, the RBA (Reserve Bank of Australia) has stated that the conditions
in the housing market were gradually stabilizing following a drawn-out property
downturn, but noted fall in prices had slowed in some markets and auction
clearance rates increased.
lowered to a minimum of 5.5%, in line with its major peers. its interest rate
floor to 5.5% and increased its interest rate buffer to 2.5% which covers all
new home loan applications starting August 5.
It is the
latest among the 4 major banks to amend it serviceability policy and joining
all other competitors, the ANZ (Australia and New Zealand Banking Group),
Westpac, and CBA (Commonwealth Bank), Macquarie, MyState Bank, Bendigo and
Adelaide Bank, Suncorp, the Bank of Sydney and Auswide Bank.
The new NAB
interest rate floor is in line with ANZ’s announcement that they would lower
their interest rate floor to 5.5%.
announcement has seen it undercut CBA and Westpac as they are the 2 major
competitors which dropped their rates to only 5.7%.
At this point, Macquarie holds the lowest interest rate floor of 5.3%, on the other hand, MyState dropped its interest rate floor to only 6.2%.