The ANZ Bank has advised that its ‘floor rate’ for home loan customers will be reduced from 7.25% to 5.5% in response to the Australian Prudential Regulation Authority’s (APRA) recent reforms. ANZ will also increase its sensitivity margin to 2.5%. Rival banks are expected to quickly follow ANZ in reducing their floor rates, which are used to assess a borrower’s ability to repay a loan. From The Australian:
“In response to recent APRA announcements … ANZ will now set its own minimum floor rate of 5.5 per cent and has adjusted the standard buffer to at least 2.5 per cent plus a loan’s interest rate,” ANZ told its broker network…
The move is expected to see other banks quickly follow with their own minimum floor to assessing a borrower’s ability to repay a loan. The change is expected to help boost the nation’s property market… by increasing a customer’s or household’s borrowing capacity by up to 14 per cent…
