ANZ the odd one out on mortgage stress testing exceptions
ANZ will remain an outlier on mortgage stress-testing rules compared to its rivals, believing that relaxing lending criteria for refinancing borrowers would be a marketing exercise that would have little effect.
On Thursday, National Australia Bank became the third of the four big banks to say it would make exceptions to strict stress-testing standards for borrowers – on a case-by-case basis – attempting to refinance.
While ANZ is now the odd one out, but sources told AFR Weekend the bank was not feeling the pressure to follow suite. Dion Georgopolous
The serviceability buffer is a regulator-enforced standard requiring lenders to review the ability of borrowers to repay their home loan at interest rates 3 percentage points over the market rate. NAB’s basic variable home loan rate is 6.24 per cent, so it would assess if potential borrowers can repay at 9.24 per cent.
ANZ declined to comment on Friday, but sources with direct knowledge of the bank’s analysis told AFR Weekend that the lender felt the current buffer was appropriate given the economic environment. The market expects the Reserve Bank to increase interest rates for the 13th time in 15 months in August – to 4.35 per cent – with two more rises likely.
Sources close to ANZ’s decision-making said the strict criteria applied by other banks to the lending criteria exceptions meant that they would affect only a minimal number of borrowers. ANZ was also pleased with the growth in its mortgage book, those people said.
Despite the Australian Prudential Regulation Authority reminding banks that the buffer is in place to protect from economic uncertainty, and the Council of Financial Regulators deeming the current level “appropriate”, Commonwealth Bank and Westpac have
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