Westpac and Australia and New Zealand Banking Group (ANZ) have started lowering the interest rates they use to stress-test loan applications, following the Australian Prudential Regulation Authority’s (APRA) announcement of looser lending rules.

The two banks were the first among the Big Four to implement more relaxed lending rules.

Westpac has started assessing the serviceability capacity of its customers using a minimum 5.75% floor test. ANZ announced a new 5.50% floor rate for retail lending, according to a market memo seen by Reuters.

Meanwhile, the Commonwealth Bank of Australia (CBA) was in the process of reviewing its own testing rate, a CBA spokeswoman said.

“Now is the right time to change the approach to how the affordability rate floor is determined, given the continuing low-interest-rate environment,” the spokeswoman said in an emailed statement to Reuters.

House prices are now stabilising, and APRA’s credit easing measure was “likely to see a boost in borrowing capacity for many new borrowers”, according to the central bank’s July policy meeting minutes.

The cut means borrowers applying for home loans carrying variable loan rates of about 3.5% will now be tested on their ability to repay a loan with a 6% interest — 1.5% lower than before.