A spokesperson for Bankwest, a CBA-owned Perth-based bank, said:

"We’re currently reviewing our settings in light of recent market developments in the interests of responsibly supporting customers in the current rising rate environment."

Meanwhile, a spokesperson for the Bank of Queensland group (of which ME Bank and Virgin Money are also part), said the group "understands the ongoing challenges this environment has presented to some homeowners refinancing their home loans."

"In response to this, BOQ Group continues to regularly review its rate serviceability buffers and is proactively contacting all customers on a fixed rate home loan expiring in the next 12 months, to help them to prepare for this change and offer support,” the spokesperson told Savings.com.au.

Savings.com.au also contacted NAB and ANZ spokespeople, who said there is currently nothing in the works to suggest these banks are changing their positions - Bendigo & Adelaide Bank and Suncorp representatives said similar.

On Thursday Australia's largest bank CBA announced it would lower serviceability buffers on some refinancing applications to 1% from the APRA-recommended 3%.

Last month Westpac announced similar serviceability changes, and so too did non-bank lender Resimac. 

Savings.com.au also contacted CBA-owned refinance-only outfit Unloan, as well as Newcastle Greater Mutual.

NGM, the merged entity between Greater Bank and Newcastle Permanent, said it still applies a 3% buffer, but there could be exceptions.

"Particularly in the current environment, borrowers who are seeking to refinance are assessed on a case-by-case basis. Where they meet APRA’s guidance for exception processes, we can use exceptions to policy for matters such as the serviceability buffer," NGM CEO James Cudmore said.

While the 3% APRA buffer is not a hard rule, its chair John Lonsdale said banks should make exceptions only in limited circumstances and apply them carefully.

It's estimated only around 1-3% of home loans were assessed in 'exceptional' circumstances. 

Mortgage prisons: A 'perverse' outcome

Australian Banking Association's CEO Anna Bligh told the Savings Tip Jar podcast last week that while banks 'actively support' the buffer, not applying it flexibly means trapping some customers in a mortgage prison.

This means that even though they've been paying a higher rate and are looking to save money, they can't because of the stress test.

"Banks think that the serviceability buffer is actually a really important part of the credit assessment process, and they use it all the time," Ms Bligh said.

"Banks are saying in very limited circumstances, a customer that [the bank has] had for a long time, they've never missed a payment, they are a good credit risk, you know them and you know their performance, they are applying for the same loan for the same house at a reduced rate, then there should be some flexibility in the use of the buffer.

"Otherwise you just end up with a very perverse outcome, that in order to protect someone, you've locked them into a higher payment."

Context: Serviceability 101

Advertisement

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
Filters
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkComparePromoted ProductDisclosure
6.04% p.a.
6.06% p.a.
$3,011
Principal & Interest
Variable
$0
$530
90%
4.6 Star Customer Ratings
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Quick and easy online application process.
Disclosure
5.99% p.a.
5.90% p.a.
$2,995
Principal & Interest
Variable
$0
$0
80%
Apply in minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
 Disclosure
6.09% p.a.
6.11% p.a.
$3,027
Principal & Interest
Variable
$0
$250
60%
  • No annual fees – None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
 Disclosure
5.69% p.a.
6.16% p.a.
$2,899
Principal & Interest
Fixed
$0
$530
90%
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Flexibility to split your loan with both fixed and variable rates
 Disclosure
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Important Information and Comparison Rate Warning

Photo by Atlas Company on Freepik



Ready, Set, Buy!


Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!

With bonus Q&A sheet and Crossword!

Download Free
By subscribing you agree to our privacy policy