ANZ increases servicing rate for loans

ANZ has become the latest bank to increase its servicing rate for new loans, as lenders tighten their criteria on mortgage applications.

The lender raised its servicing rate in late March, advisers say. The bank has increased its minimum living expense rate, the advisers said. ANZ now requires uncommitted monthly income of at least $500 to pass servicing, one adviser noted.

In the past month, advisers have been told to check pre-approvals they have with ANZ, as they may need to be recalculated with the new servicing calculator.

ANZ’s new servicing requirements come as a range of lenders put the brakes on lending. Advisers say the Responsible Lending Code, scrutiny from the Reserve Bank, and pressure from the Australian Securities & Investments Commission on lenders across the Tasman are to blame for the tougher requirements.

ANZ says it reviews its servicing calculator every three months. A spokesman said: “As a responsible lender, we verify the applicant's details and assess a customer’s ability to repay a proposed home loan.  This includes the application of an ‘serviceability rate’ to reduce the risk of customers being unable to service their loan repayments should interest rates increase.”

Advisers say ANZ’s move follows a wider trend.  NZFSG’s Bruce Patten says it is important advisers clearly demonstrate their clients’ ability to pay off their loans. “Banks have all pushed up their test rate. They have all increased the client cost of living. Banks are under pressure to be more realistic about what the real cost of living actually is, and not just having an off the cuff formula that fits everybody. They want people to do some analysis on an individual’s ability to service their debt.”