APRA changes to home loan serviceability requirements

Not only did the beginning of July see a rate cut for a second month in a row, but also the relaxation of APRA’s mandatory lending “stress tests” or home loan serviceability requirements. As of July 5 2019, lenders no longer need to ensure customers can afford their home loans at a 7% interest rate. Instead, lenders only need apply a 2.5% serviceability buffer in assessing customer’s ability to make their mortgage repayments.

After a the loosening on serviceability assessment rates by APRA we our now seeing the direct flow on effects for our clients. Here are two case studies from our current clients:

Client 1 Previous APRA servicing Current APRA servicing
Single Employed $600,000 mortgage $700,000 mortgage
First Home Buyer $120,000 income 7.25% assessment 5.74% assessment
3.24% rate, 2.5% buffer
Client 2 Previous APRA servicing Current APRA servicing
Family Dual income $1,875,000 mortgage $2,170,000 mortgage
Upgrading property $175,000 (Husband) 7.25% assessment 5.80% assessment
$190,000 (Wife) 3% rate, 2.5% buffer

Amid record low interest rates, a recovering housing market and loosened serviceability requirements, it may be time to reassess your home loan. Chat to one of our brokers today about your new home loan or refinance.