RBNZ Comments on the Bank's Servicing Test Rates | Ep. 80

In this episode, we discuss the Reserve Bank of New Zealand's recent comments on the banks' test servicing rates. As a recap, these test rates, are the interest rate that the bank will use to test whether you can afford a mortgage or not for your investment property (or any other property you are looking to purchase). The RBNZ has said that "we may be at a turning point" in regards to these test rates. If these rates decrease (they're at about 7% at the moment) then borrowers will be able to borrow more, which could add inflationary pressures to the market.  These moves would bring NZ inline with the Australian banks, which have recently decreased their test rates to around 6%. However, it should be noted that the test rates are set by each individual bank, and the central bank does not have control over how the banks set these rates.