, those who can’t switch to cheaper home loans due to higher interest rates.
The survey supports concerns about mortgage prisoners who are unable to switch loans because the sharp rise in interest rates and the sharp fall in property prices over the past 13 months mean they no longer meet the 3 per cent serviceability buffer the banks are required to apply by the prudential regulator.The buffer means many borrowers looking for refinance are being assessed as if they would be charged an interest rate well north of 8 per cent.
“However, in our view, it is inevitable some customers will not be able to meet their higher repayments and a rise in credit impairment will likely be seen,” he adds. He says data showing home loans sales in NAB’s private bank growing faster than its main retail bank also supports the theory it is the rich driving house prices.
And the willingness of wealthier customers to switch lenders will further weigh on banks’ net interest margins because the banks will be forced to offer discounts to retain borrowers. NIMs peaked at the start of the year, and are expected to keep falling.end controversial cashback incentives to borrowers,