To assist customers who may struggle to meet the industry standard for loan repayment assessment, National Australia Bank (NAB) announced its plan to revamp its like-for-like refinancing criteria on Friday.

"We're concentrating on updating our current process to enable qualified refinance customers to switch to NAB," claimed the bank. These customers have good creditworthiness but may not meet standard lending criteria."

The Australian Prudential Regulation Authority (APRA) recommends that banks grant loans to customers only if they are confident that the customers can repay them at three percentage points above the prevailing market rates.

The nation's "Big Four" banks have been publicly urging APRA to relax this rule due to the current high-interest rate environment, with the Reserve Bank of Australia's cash rate reaching an 11-year peak of 4.10%.

They argue that individuals who obtained loans before the central bank's policy tightening cannot refinance because they would fail the 3% serviceability test.

In the previous month, the Commonwealth Bank of Australia, the leading lender, reduced the buffer rate for certain borrowers refinancing their existing home loans from the industry standard of 3% to 1%.

Westpac Banking Corp, the second biggest mortgage lender in Australia, announced in May that it would introduce a modified serviceability assessment rate.

Following NAB's decision, ANZ Group Holdings is the only one of the top four banks that have relaxed its refinancing loan criteria for consumers who do not meet APRA standards.

NAB disclosed that the changes to its refinancing criteria will be effective on July 21. However, the bank also emphasized that it will adopt a "case-by-case" approach when evaluating convenient serviceability.

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