Advisers believe banks should adapt their servicing tests for borrowers after the Official Cash Rate plunged to 1%, according to a recent article by goodreturns.co.nz.
'Leading advisers say banks continue to test customers' borrowing abilities at rates of close to 8%, despite the central bank rate falling by 0.75% since May,' states the online article.
'They believe lenders should adapt to the new environment and test borrowers at a more reasonable rate of interest'.
Goodretruns.co.nz contacted Craig for his take on the situation, and quote him in the article:
'Craig Pope, of Pope & Co. Mortgages in Wellington, says the "magnitude" of the Reserve Bank OCR cut could lead to a rethink from the banks.
"I think the banks will start to look at that and ask 'is it fair?' Given the OCR has dropped, I'd think that would be high on the radar for banks."
Pope said some banks had begun to make subtle changes on servicing calculators, but there were no updates on the servicing test rate.'
You can read the full article on the goodreturns.co.nz website.