Call to scrap credit test to free households from mortgage prison
Hundreds of thousands of borrowers would be freed from mortgage prison if banks were no longer required to conduct serviceability tests on refinancing applications, with new research revealing the assessments are also locking first home buyers out of the market.
An increasing number of prospective borrowers and refinancers are unable to take out a loan because they cannot pass the Australian Prudential Regulation Authority’s serviceability test, which assesses whether a person would be able to make mortgage repayments if interest rates increased by 3 percentage points from current levels.
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