Rate fever: Westpac slashes lowest variable, as its fixed rates soar

Competition in variable home loan rates is heating up with Westpac the latest big four bank to slash its lowest variable rate.

This follows on from cuts to the basic variable rate by NAB on 9 March and ANZ on 8 February.

Westpac’s lowest variable rate is now 2.09 per cent for people with a 30 per cent deposit – making it the lowest variable of the big four. St George and Bank of Melbourne are offering 2.04 per cent for borrowers with a 40 per cent deposit.

The group is also offering cashback to refinancers with $3,000 for Westpac and $4,000 for the subsidiaries.

However, fixed rates continue to rise with the Westpac Group increasing its 1- to 5-year rates for owner-occupiers and investors by up to 0.30 per cent.

This takes Westpac’s 4-year fixed rate for owner-occupiers paying principal and interest to 3.99 per cent. In April last year, this rate was 1.89 per cent – that’s an increase of 2.10 percentage points in less than a year.

Today’s Westpac home loan rate changes for owner-occupiers 

Note: Above rates are for owner-occupiers paying principal and interest on a package rate. LVR requirements apply.

Monthly repayments are on a $500K loan over 30 years.

Westpac home loan rates 1 year ago vs now

Source: RateCity.com.au. Rates are for an owner-occupier paying principal and interest. LVR requirements apply.

RateCity.com.au research director, Sally Tindall, said: “It’s astonishing to see some fixed rates rise by over two percentage points in the last 12 months, when the cash rate hasn’t moved a muscle.”

“Westpac and other banks are responding to rising costs of funding and expected RBA hikes,” she said.

“As a result, the majority of big four bank owner-occupier fixed rates now start with a ‘3’, some even a ‘4’.

“It’s no wonder the proportion of customers choosing to fix is plummeting,” she said.

RateCity.com.au data shows variable rates are continuing on a different trajectory, for now.

“Westpac is now offering an ultra-competitive 2.09 per cent for new customers with a decent deposit, with an extra $3,000 cashback to tempt refinancers,” she said.

“St. George and Bank of Melbourne have gone one better with a basic variable as low as 2.04 per cent and a cashback lure of $4,000.

“While now is a great time for variable-rate customers to be moving to a lower rate, people need to be acutely aware the RBA is poised to hike this year.

“A year ago, the battleground for the banks was still squarely set on fixed rates. However, record levels of mortgage holders are now locked into a fixed rate, and so banks have shifted their focus to variable rate customers looking to switch,” she said.

Source: Australian Bureau of Statistics, Lending Indicators January 2022, released 1 March. Percentages include internal and external refinancing, in original terms.

Lowest big four bank owner-occupier home loan rates

Source: RateCity.com.au. Note: Some loan-to-value ratio requirements apply.

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