Major further lowers serviceability floor

by Madison Utley23 Sep 2019

A major bank has announced its serviceability rate will be further lowered at the start of October, following its original adjustment  after APRA updated its guidance informing serviceability in July. 

Westpac will decrease its floor rate from 5.75% to 5.35%, effective 30 September.

The same change will go into effect at its subsidiaries: St. George, BankSA and Bank of Melbourne. 

After the initial round of floor reductions across lenders of all sizes, Westpac matched CBA with the higher floor rate of the big four banks at 5.75%, while ANZ and NAB each amended theirs to 5.50%.

Smaller lenders followed suit, the majority also updating their rates to either the 5.50% or 5.75% figure. 

While some went even lower, ME Bank amending its rate down to 5.25% and Macquarie to 5.30%, Westpac has taken a step away from the other majors with its newest update.  

With July marking the strongest demand for new mortgages in five years and further RBA rate cuts expected in the near future, the floor reduction is likely intended to capitalise on the strong market activity forecasted to continue into the coming months.