The Commonwealth Bank of Australia (CBA) has lowered its floor for home loan serviceability assessment from 7.25 per cent to 5.75 per cent and increased its buffer to 2.5 per cent.
The changes come into effect for all new home loan applications starting from Monday, 22 July.
The major bank is the latest lender to adjust its serviceability policy after the Australian Prudential Regulation Authority (APRA) changed its home lending guidance.
Previously, APRA required a 7 per cent interest rate floor for mortgage assessments. Now, lenders can assess their own serviceability terms.
In a statement to nestegg’s sister publication, Mortgage Business, CBA’s executive general manager of home buying, Dan Huggins, said: “We welcomed APRA’s decision to update its guidance relating to serviceability assessment rates.”
“Following a review of our serviceability rates based on APRA’s new guidance, our portfolio and our risk appetite, from Monday, 22 July, we will introduce a new 5.75 per cent floor rate and 2.5 per cent interest rate buffer.
“In considering and delivering these changes, we have ensured we continue to meet our regulatory commitments and drive great customer outcomes whilst also delivering a timely and consistent service.”
CBA joins the likes of ANZ, Westpac, Macquarie, Suncorp and MyState, all of which have adjusted their credit policies in response to APRA’s announcement.
MyState, however, has adopted a more conservative approach in its response to the regulatory changes, lowering its interest rate floor to 6.2 per cent, effective from 15 July.
