These bank test interest rates have fallen in the past few years, reflecting the low interest rate environment. "There are several options that could be used to specify a floor if we implemented a test interest rate floor, such as: a. A uniform fixed test interest rate floor. "A benchmark rate, plus a fixed buffer may be the most appropriate methodology for specifying a test interest rate floor – as it fits our preference that a test interest rate floor should be stable over time, move automatically and be the same for all mortgage applicants. Additionally, borrowers would all be subject to the same test interest rate floor, which would automatically move through time," the Reserve Bank says.

Source: Stuff November 23, 2021 00:24 UTC