ANZ hikes home loan stress testing rate to 7.6%, shrinking buyer pool further

The country’s largest home loan provider has increased the rate it stress tests home loan applicants at to 7.6%.

An ANZ spokesperson confirmed the bank’s servicing sensitivity rate rose on Monday morning from 7.35%.

The stress test was regularly reviewed as interest rates changed, the spokesperson said.

Mortgage Lab chief executive Rupert Gough said the increase since early-May (when ANZ’s stress test sat at 7.15%) equated to about a 4% drop in affordability.

* ASB becomes second bank this week to increases home loan stress test
* Over half of new home loans are being issued with 30-year terms
* Bank of New Zealand lifts home loan rates

ANZ has led increases to home loan stress testing levels in recent months.

David White/Stuff

ANZ has led increases to home loan stress testing levels in recent months.

In other words, someone who could borrow $1 million six weeks, could now borrow only $960,000, all other things being equal.

“While the change in servicing rate will have a measurable effect on mortgage applicants, house prices do appear to be also retracting slightly,” Gough said.

“It’s likely that the change in borrowing v the change in house prices will mean buyers are buying roughly the same property.”

Recently, ANZ has led the market on increasing stress testing rates, with other banks quickly following suit by putting their own rates up.

Glen McLeod, director of Edge Mortgages, said with the Reserve Bank predicting the official cash rate could peak at 4% by mid-next year, SSRs could hit 9%.

He said the higher the hurdle created by SSRs, the fewer people will qualify for large home loans, which would reduce the buyer pool and could reduce house prices.

“That could draw them (prices) back as vendors can’t get the price they’re hoping for because purchasers can’t afford to buy at that level.”

BNZ on Tuesday this morning said its fixed home loan interest rates had increased, with one-year fixed rates moving to 4.85%, and two-year fixed rates to 5.19%

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