Commonwealth Bank (CBA) has adjusted its floor rate, becoming the third of Australia’s big four banks to take action after APRA amended its serviceability guidelines earlier this month.
Effective today, 22 July, CBA’s floor rate will decrease from 7.25% to 5.75%.
Its buffer rate will change from 2.25% to 2.50%, as per APRA’s guidance.
Executive GM of home buying, Dan Huggins, said that CBA “welcomed” APRA’s decision to update the parameters of serviceability. He attributed the new 5.75% figure to “APRA’s new guidance, our portfolio and our risk appetite.”
“In considering and delivering these changes, we have ensured we continue to meet our regulatory commitments, and drive great customer outcomes whilst also delivering a timely and consistent service,” he added.
Applications submitted prior to 22 July and yet to be formally approved will be assessed using the updated rates.
ANZ was the first major Australian bank to announce its serviceability changes, lowering its floor rate down to 5.50% on 12 July.
Westpac responded not long after, lowering its floor rate to 5.75%.
NAB remains the sole major yet to amend its policy.