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The Australian Prudential Regulation Authority (APRA)  Chairman Wayne Byres announced on Friday that the regulator would scrap a minimum 7% interest testing rate for bank customers’ loan applications, in an effort to revive the sluggish economy, Reuters reports.

Byres noted: “In the prevailing environment, a serviceability floor of more than 7% is higher than necessary.”

“With many risk factors remaining in place, such as high household debt, and subdued income growth, it is important that (banks) actively consider their portfolio mix and risk appetite in setting their own serviceability floors,” Byres added.