In reaction to modifications in APRA, Westpac has shifted its interest rate floor to 5.75 percent from 7.25 percent to how banks can evaluate mortgage borrowers. This follows movements from ANZ, which has shifted its interest rate floor from 7.25% to 5.5%. These movements of the main lenders follow the modifications to the rules of the banking regulator.
APRA has earlier set interest rate floors, dictating that banks must evaluate the capacity of borrowers to repay loans at an interest rate of 7.25 percent, but now allows lenders to self-assess. These changes to the lending serviceability rules, coupled with the removal of APRA’s interest only lending constraints previously this year, It will make it simpler for Australian investors to access funding than it was in past years.
ANZ Banking Group was the first lender to pass on the advantage of tightened lending boundaries tipped to significantly boost home buyers purchasing power. An ANZ spokesperson said the choice of APRA was reasonable in the present low rate setting and the new prices would allow more Australians to purchase a house or refinance their loans.