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Borrow

The big banks making it easier to borrow

By Grace Ormsby · July 16 2019
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ANZ and Westpac
The big banks making it easier to borrow

The big banks making it easier to borrow

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By Grace Ormsby · July 16 2019
Reading:
egg
egg
ANZ and Westpac

Two of the big four banks have lowered the rate floor used for the consideration of customer lending, which looks likely to make it easier for borrowers to have loans approved.

The decision by Westpac and ANZ to adjust their lending criteria is in response to the recent changing of lending criteria by the Australian Prudential Regulation Authority (APRA).

Before the change, if an individual appeared unable to pay back a loan at a mortgage rate of 7 per cent, they would not be approved for the loan.

Now, authorised deposit-taking institutions will be empowered to set their own review standards, as long as they factor in a buffer of at least 2.5 per cent interest.

ANZ was the first bank to announce it would be adjusting its criteria, dropping the serviceability rate to 5.5 per cent from 7.25 per cent, while increasing its sensitivity buffer to 2.5 per cent from 2.25 per cent.

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Westpac has also moved its current interest rate floor down accordingly to 5.75 per cent from 7.25 per cent.

The bank also increased its buffer to be in line with APRA standards, lifting its rate to 2.5 per cent from 2.25 per cent.

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