The major bank has updated its mortgage serviceability assessment policy, becoming the final big four bank to amend its policy in response to APRA’s new guidance.
NAB has lowered its interest rate floor to 5.5 per cent and increased its interest rate buffer to 2.5 per cent, effective for all new home loan applications from 5 August.
The revisions have come in response to the Australian Prudential Regulation Authority’s (APRA) changes to its home lending guidance, in which it scrapped the 7 per cent interest rate floor for mortgage assessments and increased the buffer rate to 2.5 per cent.
Commenting on the changes, NAB’s chief customer officer of consumer banking, Mike Baird, said: “NAB welcomes the updated APRA guidelines on home lending serviceability.
“We believe now is the right time to change the approach to how the affordability rate floor is determined, given the continuing low interest rate environment.”
He added: “As a responsible lender, serviceability is assessed using a number of factors and we consider all lending applications on a case-by-case basis.”
NAB is the latest lender to amend its serviceability policy, joining the likes of ANZ, Westpac, the Commonwealth Bank, Macquarie, Suncorp, MyState Bank, Bendigo and Adelaide Bank, the Bank of Sydney and Auswide Bank.
NAB has matched ANZ’s rate floor of 5.5 per cent and has undercut CBA and Westpac, who dropped their floor rates to 5.75 per cent.
However, as it stands, Macquarie has the lowest floor rate (5.3 per cent), with MyState on the opposite side of the spectrum, dropping its floor rate to just 6.2 per cent.
All the aforementioned lenders have also increased their buffer rates to 2.5 per cent.
Other lenders are expected to follow suit, including non-banks, with Resimac, which, along with the rest of the non-bank sector, is not formally bound by APRA’s guidance, also confirming that it is reviewing its policy.
*The story has been updated to reflect that ANZ's floor rate has been cut to 5.5 per cent, not 5.55 per cent (as initially reported).
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