AMP Bank's ability to maintain competitive pricing in the domestic mortgage market is set to come under renewed pressure after Standard & Poor's lowered its credit ratings.The global ratings agency announced late on Friday that it had lowered the long and short-term issuer ratings on AMP Bank by one notch in response to the parent company's decision to sell its life insurance business.AMP Bank's long-term issuer credit rating was downgraded to A- from A, while the short term rating was lowered to A-2 from A-1.S&P also flagged the potential for a further downgrade of the long term rating after placing the bank on "CreditWatch with negative implications"."With the progress in the divestment of AMP group's life insurance business, we believe that the relatively less creditworthy asset management, wealth management, and banking businesses will now drive the group's financial and risk profile," S&P said in a media release."Consequently, we consider that AMP group creditworthiness has weakened and could further moderate. "In our view, pressures on group credit quality also translate through to AMP Bank because the ultimate creditworthiness of the bank benefits from likely support from the broader group, if needed."Historically AMP Bank's credit ratings have been boosted by its presence within the AMP group.According to S&P the bank's creditworthiness would be rated at "BBB" on a standalone basis."We will resolve the CreditWatch status on AMP Bank when we gain greater clarity on the credit quality and the financing structure of the remaining wealth and asset management operations, as well as the group's strategy in relation to the bank," S&P said."Taking into account the likely increased strategic importance of the bank to the group following the divestment of life insurance, we expect to lower our issuer credit rating on the bank because we believe that the group credit profile could be weaker than 'a-'."  According to Canstar, AMP is currently offering standard variable P&I mortgage at above 4 per cent for homebuyers looking to borrow A$350,000, which ranks it products - in terms of pricing - outside the top quartile of lenders.The downgrade will increase the bank's wholesale funding costs and limit its ability to discount mortgages without sacrificing margins.