preferredfinance.net

Print this page

Westpac to lower stress test on some refinance applications as interest rates skyrocket

Westpac to lower stress test on some refinance applications as interest rates skyrocket

May 05, 2023

Westpac will lower the stress test for homeowners looking to refinance in a bid to help borrowers avoid “mortgage prison”.

Nearly 900,000 Australians who secured record low interest rates on a fixed term mortgage during the Covid-19 pandemic will have come off the rate and face significantly higher levels of interest on their new repayments.

Making matters worse, some looking to refinance their loan with a new bank in the hope of a lower interest rate are finding they are trapped where they are, as they cannot pass a financial stress test.

Under the standard test, a bank checks a borrower’s finances to ensure they would still be able to make repayments if interest rates rose by 3 per cent more than the rate they are currently looking to borrow at.

From next week, Westpac will allow some people looking to refinance their mortgage to be tested under a “modified Serviceability Assessment Rate” if they do not pass the standard serviceability test.

 

LATEST NEWS


<< prev.   next >>



   

 Phone    1300 188 118