ANZ lifts home loan stress test

The country’s largest home loan provider, ANZ, has increased the interest rate it stress tests mortgage applicants at from 6.7% to 7.15%.

The change will reduce the amount most buyers can borrow by roughly 4.5%, Mortgage Lab chief executive Rupert Gough says.

In other words, if a borrower had $800,000 pre-approved last week, that would drop to about $764,000.

Gough said the knock-on effect would be buyers were removed from competing for a certain price range of property, and moved down a peg on the ladder, which in turn may reduce prices further.

‘‘Less buyers, less demand, house prices go down,’’ Gough said. ‘‘And already the buyers were pretty thin on the ground.’’

He said while stress test increases were another hurdle for buyers, along with rising interest rates and harsher lending rules under the Credit Contracts and Consumer Finance Act it wasn’t the bank’s fault, and ANZ was acting correctly and responsibly to ensure borrowers could afford theirmortgages.

A spokespeson for ANZ said the bank’s servicing sensitivity rate was changed on Monday, and was regularly reviewed in line with the interest rate environment.

‘‘This means when interest rates rise, we are likely to increase the servicing sensitivity rate to help ensure we have a sufficient buffer in our affordability assessments so that customers can continue to afford their home loan repayments despite rates rising.’’

ANZ advised the servicing sensitivity rate referred to stressing the borrowing interest rate only, not stressing the customer’s spending behaviour.

‘‘The servicing sensitivity rate is one of the buffers we build into our affordability calculations to help ensure customers are able to manage their repayments if interest rates rise,’’ the spokesperson said.

Property investor Steve Goodey said the change would lock more people out of the market, and was likely to drive more people to second-tier lenders, which charged higher interest rates but didn’t have such strict lending rules.

‘‘It’s gone to the point of being a little bit ridiculous to get money approved,’’ Goodey said.

‘‘It’s gone to the point of being a little bit ridiculous to get money approved.’’

Steve Goodey Property investor