Test rate will soon increase to 8.15%
ANZ New Zealand has announced plans to increase its mortgage serviceability interest rate to 8.15%, according to a report by interest.co.nz.
The decision comes as 57% of the bank’s home loan portfolio continues to pay interest rates at 2-3%, ANZ NZ CEO Antonia Watson told interest.co.nz, while advertised rates have already pushed ahead of 6%.
“Chunky increases are ahead for many borrowers when they refix,” the report said.
Mortgage serviceability refers to an applicant’s ability to meet repayments. Lenders calculate this using a particular figure based on their current interest rates. In 2021, when home loans were still at 2.4%, ANZ tested serviceability at a rate of 5.8%. The current rate is now 7.95%.
Watson noted that borrowers have so far remained resilient despite recent economic pressures, with ANZ observing that there are still fewer people falling behind repayments than before the COVID-19 pandemic.
“It is starting to pick up a little bit, but still behind historic averages,” Watson told interest.co.nz.
ANZ NZ recently reported a full-year cash net profit after tax of $2.064 billion. This is an 8% increase from the previous financial year, attributed to pent-up economic activity as pandemic restrictions eased, as well as a buoyant housing market.
“While inflation and supply chain problems, particularly for importers and exporters, were an issue for many customers throughout the year, the desire to get back to some kind of normal kept consumer spending up,” Watson said. “While the housing market has quietened significantly in recent months, following four official cash rate (OCR) rises since May, it was strong for most of the financial year.”
