the adviser logo

ANZ makes changes to HEM calculation

by Reporter8 minute read
ANZ makes changes to HEM calculation

The major bank has revised the manner in which it calculates the HEM benchmark, following on from changes implemented by Westpac.

ANZ has updated the method by which residential rental income is considered for the Household Expenditure Measure (HEM) while also changing its gearing calculations.

The new calculations where rental income is involved are the following:

  • HEM income is now calculated as the total gross income and 75 per cent of gross residential rental income minus investment loan interest costs.
  • The gearing amount is now calculated as 75 per cent of the gross residential rental income minus investment loan interest costs.

The changes are effective for new applications submitted from 26 August.


ANZ’s changes follow amendments made to Westpac’s HEM calculation.

Earlier this month, Westpac stated that to ensure expenses are captured “more accurately”, it would update and add new expense categories to “reflect industry guidelines” on the HEM values used for customer expense benchmarks.

Accordingly, Westpac made the following changes:

  • Applied income-based HEM bands based on total gross unshaded income, including gross rental income.
  • Offset investment property expenses against rental income, and adds the resulting available income to the taxable gross income to determine marginal tax rate and calculate net income.
  • Changed the definition of a dependent from “a child under the age of 18” to include “a child 18 years or over who lives with the applicant(s) and is totally financially reliant on the applicant(s)”.

Westpac’s changes took effect on 20 August.

[Related: Westpac revises home lending policy]

Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more