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APRA drops serviceability rate

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A key constraint on borrowing limits that was put in place during the property boom has been removed by the banking regulator. It's another move that may stimulate the soggy mortgage market.


The changes could allow a household on an average income to borrow up to $77,000 extra from a bank, while an average full-time worker could borrow up to $66,000 more, figures from comparison website RateCity suggest.

The Australian Prudential Regulation Authority (APRA) on Friday confirmed it would scrap a rule that has seen new mortgage customers assessed on their ability to manage repayments with 7.25 per cent interest rates.



APRA said on Friday that instead of that interest rate "floor," it would require banks to test if customers could manage repayments with rates at least 2.5 percentage points above a loan's current rate.

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