NAB’s Serviceability Calculator V66 Became Mandatory on 23 October With New HEM Values. A Number You Quoted Last Week May Not Survive Lodgement

The changes that catch brokers out are rarely the rate moves. Everyone sees those. It is the calculator version that changes overnight.

Broker Daily‘s weekly policy round-up on 23 October noted that NAB would introduce serviceability calculator V66 that day, with updated Household Expenditure Measure values, and that it would be mandatory for new home loan applications submitted after midnight AEDT. In the same round-up: a bigger LMI calculator ceiling at NAB, and a set of eligibility and ID changes at Skip by LMG.

None of these will lead a news bulletin. All three change files sitting in your pipeline right now.

What NAB changed

Two things, per the round-up:

• Serviceability calculator V66 from 23 October, updating HEM values “to align with APRA requirements”. Mandatory for new home loan applications submitted after midnight AEDT that day.
• QBE LMI calculator expanded to cover eligible loans up to $5 million, removing the need for manual quotes on eligible loans above $2.5 million.

The round-up does not publish the new HEM values or the size of any change in borrowing capacity, and NAB’s calculator is a broker tool rather than a public document. So this piece does not guess at a number. The point is that the inputs changed, and the outputs will follow.

Why a HEM update moves borrowing capacity

HEM is a benchmark of household living expenses that lenders use as a floor when a client’s declared expenses come in lower. When a lender updates the HEM values in its calculator, the expense figure on files that sit at the benchmark changes, and borrowing capacity changes with it.

Which way, and by how much, depends on the household. A family whose declared expenses are well above the benchmark may see little difference. A household whose expenses sit near the floor is the one most likely to move. You will not know until you re-run it.

That is the practical issue. A client who heard a borrowing capacity figure from you last week may be bidding at auction this weekend on that figure.

The pipeline re-run

The work here is mechanical, and it is worth doing before anyone asks:

1. Pull every NAB scenario you priced before 23 October that has not been lodged.
2. Re-run each one on V66 with the same inputs.
3. Compare the new borrowing capacity with what the client was told.
4. Call anyone whose number has moved, before they sign anything.
5. Save both outputs to the file, with dates.

Pre-approvals need the same look. If a client is shopping on a NAB pre-approval, check what the lender will reassess at formal approval and whether the new calculator applies. TBT has covered why the pipeline and the back book are moving in different directions this year. A calculator change is one more reason not to assume last month’s number holds.

LMI to $5 million in the calculator

The LMI change is smaller but useful. Larger loans above $2.5 million previously needed a manual quote from QBE through NAB. The round-up says eligible loans up to $5 million can now be priced in the calculator.

For brokers working higher-value markets, that removes a wait from the front of the process. It means you can show a client the LMI cost of a higher-LVR option alongside a lower-LVR one on the same day, which is exactly the comparison a best-interests file should show when the client is weighing a bigger deposit against paying LMI.

Skip by LMG: suburb, not postcode

The same round-up lists changes at Skip by LMG:

• Married borrowers holding bridging visas are now eligible.
• Bunbury, Townsville and Maitland are added to eligible locations.
• Eligibility checks move from postcode-based to suburb-based.
• Verification of identity now needs one document, a driver’s licence or passport, instead of two.

The suburb change matters most. A postcode can cover suburbs a lender treats differently. If you have declined Skip for a client on postcode in the past, the suburb check may give a different answer now. It may also give a different answer in the other direction, so check before you quote.

The record

When a lender’s calculator changes and a client’s capacity moves, the file should show it. RG 273 asks you to keep records of how you acted when providing credit assistance. Two dated calculator outputs and a short note of the conversation with the client is the record. It also protects you when a client asks, months later, why the number they were first given was different.