Lower Assessment Rate
Finally, we are here… The Australian Prudential Regulation Authority or APRA as they are commonly known have all agreed to release Australians from a tight grip on the struggling mortgage industry by advising all lenders big and small that they can change the way they assess customers’ ability to meet repayments.
A few months ago APRA announced that they wanted to make changes to the current so-called serviceability requirements by no longer expecting banks to ensure customers could still repay their loan if its interest rate increased to at least 7.25% and some even at 8% (ING) which is ridiculous if you ask me.
But the regulator, which has spent the last two years hunting down lenders that provided easy finance, said that banks can set their own minimum interest rate floor and make their calculations using a 2.5% buffer. This is fantastic news. For everybody.
That means borrowers on a typical 4% mortgage rate can expect to be assessed at 6.25% rather than 7.25%, enabling them to immediately secure larger loans which can help them wipe out ‘bad debt’ when they refinance and take advantage of the new lower rates in the market.
This is has come into full swing and I have already seen a massive difference with how all the banks calculate new loans. I have been able to soak up credit cards and personal loans so that the overall savings for my clients have been amazing.
With lower rates all around, a lower assessment rate is fantastic and is only going to assist clients achieve a better overall outcome.
Do you have any credit card debt that you need to wipe out?
When was the last time you refinanced?
Contact me now