Australian Military Bank welcomes APRA decision
Australian Military Bank welcomes today’s announcement by the Australian Prudential Regulation Authority (APRA) that the interest rate serviceability minimum of 7.25% for residential mortgages is to be lifted with immediate effect. Click here to view APRA's official statement.
John Ford, Australian Military Bank CEO, said “the Bank’s serviceability minimum is to be revised in line with APRA’s revised guidance which involves an interest rate buffer of at least 2.5% over the actual loan interest rate. The practical implication of this change is that prospective borrowers may realise a greater borrowing capacity. Interest rate buffers are a prudent thing to apply from a responsible lending perspective to ensure borrowers can continue to service their loan without hardship when interest rates rise. The adoption of a floating buffer rate in today’s environment will result in a lower interest rate serviceability minimum i.e. less than 7.25%”.
Yesterday the Bank announced that our DHOAS 3 Year Fixed Rate Home Loan will be reduced to 3.59% p.a. (4.27% p.a. comparison rate); with other fixed rate home loan products to follow suit. Mr Ford said “credit demand in the lead up to the Federal election was relatively subdued. The action taken by the RBA to reduce the target cash rates to new historic lows are influencing lending rates in the market place. The new regulatory settings could lead to stronger lending demand in the future”.
