Sometimes referred to as "stress rates” or "plug rates”- qualifying rates are the interest rates used by lenders to determine the ability of a borrower to repay a loan.
These rates are higher than the actual interest rate charged
and they are designed to ensure that the borrower won’t get into difficulty,
should the rates rise.
The Qualifying Rate is the applicable interest rate plus a
This margin is now determined by APRA and as of August 2019,
is set at 2.5 % higher than the standard rate.
So for instance, if the advertised rate on a loan is 4%, the
lender will calculate the serviceability at 6.5%.
Qualifying rates are mandatory and some lenders have a
higher rate than 2.5%.
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Tuesday, 25 February 2020