Assessment rate and serviceability buffer
The assessment rate is the interest rate a lender uses to test whether a borrower could meet repayments at a higher rate than the loan's actual rate.
Assessment rate and serviceability buffer, explained.
APRA sets a minimum serviceability buffer for residential mortgage lending by authorised deposit-taking institutions, including banks; other lenders apply their own assessment policies subject to applicable lending obligations. Some lenders use a floor rate as well, so the test is the higher of rate-plus-buffer and the floor.
For refinances of existing loans some lenders have applied a smaller buffer where the borrower is not increasing debt and has a clean repayment history. Whether that applies to you is a lender policy question, not a rule.
Tools that use this term.
Longer reads from the archive.
When the reading raises a question, ask it.
A finance review starts with a conversation and a written position from Dayan Kasturiratna, who provides the credit assistance on every file. No credit check to start.
The Learn section is general information about lending in Australia. It does not take account of your objectives, financial situation or needs, is not credit assistance, and is not tax, legal or financial advice. Lender policies, government schedules and regulations change; check the current position with the relevant body or with us before relying on it.
