Lower Serviceability Buffers Offer A Path To Refinancing

Published by Otto Dargan on July 7, 2023
Exciting news for homeowners struggling to refinance: The major banks in Australia have taken a step towards easing the burden by lowering their serviceability buffers. This means that if you meet the eligibility criteria, you can benefit from these revised assessment rates.

Which Banks Have Reduced Their Serviceability Buffer Rates?

Three out of the four major banks have now announced reductions in their serviceability or assessment buffers for refinancers; NAB became the third on 7 July. While ANZ has yet to announce a reduction, let’s take a closer look at the adjustments the other banks have made.
  • CBA has dropped its serviceability buffer to just 1 percentage point, providing an attractive opportunity for those considering refinancing.
  • NAB has recently announced that it will adopt a case-by-case approach when assessing the serviceability of refinancers starting 21 July 2023 and will lower the buffer for some.
  • Westpac also follows a case-by-case approach to evaluating the serviceability of refinancers and will lower the buffer to 1 percentage point for some.

How Does This Benefit You?

For customers who meet the eligibility criteria, this can provide a way to avoid ending up as mortgage prisoners. Serviceability buffers, also known as assessment rates, play a crucial role in the lending process. These buffers enable lenders to calculate how much a borrower could afford to pay each month if their interest rate were to increase. Currently, the buffer rate the Australian Prudential Regulation Authority has set stands at 3 percentage points above the loan product rate. For instance, if the interest rate is 4%, borrowers are assessed based on a 7% rate. So with a lower buffer, borrowers will be assessed at a lower rate, making it easier to get approved.

What Is The Eligibility Criteria To Get Reduced Serviceability Buffer Rates?

Each bank has its own set of eligibility criteria that determines who can benefit from a reduced serviceability buffer when refinancing.


  • The loan should be structured as a 30-year term with principal and interest payments.
  • The Loan-to-Value Ratio must be less than 80%.
  • The refinanced amount should be equal to or less than the outstanding amount of the existing debt.


  • Only principal and interest (P&I) repayments are accepted.
  • The homeowner should have more than 20% equity in their home.
  • The refinanced amount should match the existing debt (covering any associated bank fees up to 1% of the loan value).
  • The loan term can be the same or extended if deemed appropriate.
  • A good repayment history on the current loan is required.


  • The new loan amount should not exceed $50,000 above the loan being refinanced.
  • The refinancing must lead to a lower interest rate and monthly repayment.
  • The new monthly mortgage repayment (excluding the buffer) should be equal to or lower than the current minimum monthly repayment specified in the loan contract.
  • A credit score equal to or higher than 650 is required.
  • Only principal and interest (P&I) repayments are accepted.

Don’t Get Stuck In Mortgage Prison!

Now is an opportune time to explore refinancing options. To simplify the process, our team of mortgage brokers is here to assist you. Call us at 1300 889 743 or complete our free online assessment form today.