In June 2019, APRA recommended changes for the banks to introduce (which have largely been implemented), whereby the assessment rates, which is what they banks use to determine loan affordability (At a higher interest rate than what they actually charge borrowers), was lowered to a more realistic level. What this means is that post this change (and adopting a persons same income and expenses/liabilities), borrowers will now be able to borrow (depending on the lender), approximately 8 – 11% more than they could prior to this.

Even post these changes, there will be discrepancies between what one lender will lend to that of another. This is never advertised by the banks, they only advertise based on differentiating themselves on interest rate, however there are many other critical factors to consider when approaching a lender.

Charter Finance’s CEO, Dean Perlman advised “The APRA changes are sensible given Australia has been in a very low interest rate environment for over a decade now. Adopting a higher rate compared to one’s actual interest rate is always prudent, and every person who borrows money, should budget higher repayments for when interest rates eventually do rise (and they will at some point), but it did not make sense to have them sitting now approx. 4% above the current actual rates. APRA has now reduced this floor to be 2.5% above the actual rates (and already some banks are using higher / lower figures).”