The 'secret' mortgage rates banks don't want you to think about
There's a secret mortgage interest rate the banks aren't keen to discuss.
It's the "test rate" banks use when calculating whether a borrower can afford a loan.
The test rate is higher than the mortgage rates the borrower will pay, if they pass the test.
Mortgage broker Karen Tatterson says the public should understand mortgage affordability "test rates".
Mortgage brokers are privy to the test rates of banks, but banks don't publish them on their websites, and all the big banks refused to reveal theirs.
Currently, the test rates of the major banks run from 7.05 per cent to 7.4 per cent, brokers say.
That compares to floating mortgage rates of 5.6 to 5.75 per cent.
The test rates are used internally by banks when calculating whether a prospective borrower has the income to service the loan in case mortgage rates rise.
