This scary predicament is because the now 4 per cent of rate rises have exceeded the 3 per cent you must prove you can handle to get approved for a home loan.
So,as rates have risen,this “stress test” has meant that – for many – the ability to refinance tocut their repayments has slipped away. Except that they are already coping with a rate up at that level and higher,so they could surely cover the cost of a lower one. See the issue?
Three of the big four banks and one online lender agree with me,and have one by one relaxed their approval requirements for refinancers.
ANZ is the odd one out,and it looks as though will stay that way. The bank’s chief executive,Shayne Elliott,last week said the 3 per cent serviceability test is appropriate because “we don’t know what the future holds”.
Loading
This,despite banking regulator APRA recently implying assiduous amendments could be made to the test. The rest of our big banks have taken that to mean that not a 3 per cent,but a 1 per cent buffer is appropriate.
Full credit to Westpac for going out on this lending limb first. Next came Australia’s largest mortgage issuer,CBA,but the special treatment it is extending has both positives and potential negatives for recipient borrowers in that you mustextendyour new loan term to 30 years.