Westpac hikes fixed rates again

The Westpac group has made sweeping changes to its popular home loan rates today. 

Westpac has increased its 3-, 4-, and 5-year fixed rates by up to 0.21 per cent. This is the second time Australia’s second largest bank has lifted fixed rates in just over two weeks.

St George and Bank of Melbourne also hiked their 2-, 3-, 4- and 5-year fixed rates, however, both banks have trimmed their basic variable rate by 0.10 per cent.  

Westpac changes to lowest home loan rates (owner occupiers, 70% LVR)

Note: Above rates are for owner-occupiers paying principal and interest on a package rate with an annual fee of $395 for a loan to value ratio of 70% or less.

St George and Bank of Melbourne changes to lowest home loan rates (owner occupiers, 60% LVR)

Note: Above rates are for owner-occupiers paying principal and interest for a loan to value ratio of 60% or less, package fees apply to fixed-rate loans.

Please contact us for investor and interest-only changes for the above banks and BankSA changes.

Lenders that have moved at least one rate in the last month (5 Oct to 4 Nov 2021)

Source: RateCity.com.au. Note: A number of lenders have changed multiple home loan rates.

RateCity.com.au research director, Sally Tindall, said: “This is the second time Australia’s second largest bank has hiked fixed rates in just over two weeks.”

“Westpac has hiked its longer-term fixed rates yet again on the back of an expected increase to the cost of funding. The RBA’s shift in monetary policy this week is likely to have spurred on this decision,” she said.

“We expect more banks will hike fixed rates in the weeks and months to come, with some likely to hike multiple times in response to improving economic conditions.

“For anyone thinking about fixing their rate, it’s not too late to get a good deal. However, in this environment where banks are falling over each other to announce their fixed-rate hikes, people might want to consider paying a rate lock fee,” she said.

Rate lock fees are fees you pay to the bank to lock in your rate while your home loan application is being processed. It means that if fixed rates rise before your home loan has settled, you still get the lower rate.

“Often rate lock fees can be a complete waste of money, particularly when fixed rates are falling, but in an environment where rates are on the rise, they’re definitely worth considering,” she said.

“Home loans can take up to six weeks to settle – a lot can change in that time.

“Ultimately it’s a gamble between whether your bank is going to hike in the time it takes to settle your loan or not, however, losing to a rate hike is far more costly than losing a couple of hundred dollars on a rate lock fee,” she said.

Scenario: How new Westpac customers may have been affected

RateCity.com.au analysis shows a customer who is currently applying for a $500,000, 3-year fixed rate with Westpac, could potentially pay an extra $2,577 over the fixed-rate term if they didn’t lock in their rate. 

In this scenario, the borrower would have been better off paying Westpac’s rate lock fee of $500. However, this only applies if rates rise during the application process. 

Notes: based on an owner-occupier paying principal and interest, taking out a 3-year fixed rate loan with Westpac with a 30% deposit. The cost includes interest plus the rate lock fee in the case of the person locking in their rate. Does not include other fees. Westpac rate lock fee is 0.10% of loan balance.

Variable rates keep falling

Sally Tindall said: “Variable rates are still on the decline as banks chase new customers looking for flexibility. In the last month, 27 lenders have cut at least one variable rate, including St George and Bank of Melbourne today,” she said.

“For the last year and a half variable rates have broadly lagged behind fixed, so it’s great to see competition pick up in this space. That said, these cuts are only for new customers so people will have to be prepared to switch lenders, or at the very minimum, haggle with their existing bank,” she said.

Lowest big four bank owner-occupier home loan rates

Source: RateCity.com.au. Note: CBA and Westpac rates are for a loan to value ratio of up to 70%.

Lowest rates on the RateCity.com.au database

Source: RateCity.com.au Note: Rates are for owner-occupiers paying principal and interest. Some LVR and location requirements apply. 

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