Like dominos, they are all falling in line now.
“Introducing new Westpac Home Loan Serviceability Rates, effective Tuesday 16 July 2019”
Effective from Tuesday 16 July 2019:
- The Westpac floor rate (assessment rate) is decreasing to 5.75% p.a. from 7.25% p.a.
Now please don’t think this is all boring. This is actually very exciting news and will dramatically change the way banks differentiate. You see, most banks used to have a fixed number (7.25% or 7.40%) they used as the assessment rate. The worked out if you could afford the loan based on the loan amount multiplied by this assessment rate (plus a few other parameters like living expenses).
But this 7.25% was very commonly used. Now, there is a new way to try and undercut other lenders. No more cookie cutter number, we can play with this… (As a side note, it will be interesting to see what ING will do. They had the highest assessment rate (8.00%) so were the bank where being approved was the hardest….)
Interesting to see as well that the majors are out of the starting blocks first. I was talking my BDM (second tier lender) only Wednesday and his view was nobody would be changing assessment rates on their own. It would be a coordinated effort to make sure no lender had an unfair advantage. Hmmmmmm
Now lets see what the non bank lender will do in the next few days.