Non-major boasts lowest floor rate

by Madison Utley02 Aug 2019

Following APRA revising its guidelines for residential mortgage applications, a non-major bank has lowered its serviceability floor rate to 5.25%.

ME Bank also increased its buffer rate to 2.50% above the offered interest rate for all home loan applications, effective today, 2 August 2019.

According to the bank, “This change appropriately reflects Australia’s new low rate environment and opens up lending to more home loan customers.”

The majority of lenders who have already amended their policy in response to the APRA change have settled on a rate between 5.50% and 5.75%.

Before ME’s reduction, Macquarie Bank had the lowest adjusted floor rate at 5.30%.

Since our last round up, Teachers Mutual Limited has lowered its floor to 5.50%. Bank of Queensland and Virgin Money have reduced theirs to 5.65%. Heritage Bank and non-bank lender Resimac have adjusted their floor rate to 5.75%.

ME also announced a change to its loan to value ratio (LVR) cap for interest-only investment loans.

While before, interest-only investment loans were restricted to 80% LVR or less, the limit will now be increased to 90% LVR, also effective today.