ING Bank has announced it will loosen its underwriting rules for owner occupier and investment home loans as part of a renewed push for market share.

Under a raft of wide-ranging changes that will take effect on Thursday, ING will slash the floor assessment rate used to test the ability of loan applicants to service new debt from 8 per cent to 6.1 per cent.

The move means that more borrowers are likely to qualify for an ING home loan on serviceability grounds, although the bank’s floor assessment rate remains above the 5 per cent average of most other lenders.

ING’s new lending policies are also likely to more investment borrowers

ING has also relaxed its rules for recognising rental income of investors applying for a home loan.

The bank previously only recognised 65 per cent of rental income for loan assessment purposes but that will rise to 80 per cent from Thursday.

Canstar director Steve Mickenbecker said ING and a handful of other foreign-owned banks were enjoying a sweet-spot in the Australian mortgage market because of their ability to consistently price mortgages at a discount to the major banks.

He said this was giving them more leeway to select the types of borrowers they lend to.

“The likes of ING and HSBC are able to price mortgages competitively and the trade-off is that they can ration their lending to the quality end of the market in terms of risk,” Mickenbecker said.

“That’s why they’re their floor assessment rate is higher than other lenders.”

Mickenbecker said many lenders were looking at ways to attract investment borrowers who largely have not returned to the property market since the pandemic hit Australia in March.

“ING is probably at the tolerant end of the market in terms of its new benchmarks for recognising rental income,” he said.

“However, there’s no doubt that the investor segment of the home lending market remains soft.”