Major bank slashes mortgage rates by up to 130 bps

Westpac has announced variable and fixed rate reductions of up to 130 bps across its home loan product suite, effective for new loans from 9 September.

Variable rate changes

For owner-occupiers:

• Flexi First Option Home Loan rates for borrowers paying P&I have been cut by 15 bps from 3.58 per cent (3.59 per cent comparison rate) to 3.43 per cent (3.44 per cent comparison rate).

For investors:

• Flexi First Option Investment Loan rates for borrowers paying P&I have been cut by 34 bps, from 4.08 per cent (4.09 per cent comparison rate) to 3.74 per cent (3.75 per cent comparison rate).
• Flexi First Option Investment Loan rates for borrowers paying IO have been cut by 44 bps, from 4.43 per cent (4.44 per cent comparison rate) to 3.99 per cent (4.00 per cent comparison rate).

Fixed rate changes

• For owner-occupiers paying P&I, Fixed Option Home Loan rates have been cut by up to 80 bps, and now start from 3.29 per cent (4.05 per cent comparison rate).
• For owner-occupiers paying interest-only, rates have been cut by up to 110 bps, and now start from 3.89 per cent (4.63 per cent comparison rate).
• For investors paying P&I, rates have been cut by up to 110 bps, and now start from 3.49 per cent (4.49 per cent comparison rate).
• For investors paying IO, rates have been cut by up to 130 bps, and now start from 3.59 per cent (4.72 per cent comparison rate).

Following the announcement, Westpac’s general manager of home ownership, Will Ranken, said the changes have come in lieu of heightened competition in the marketplace.

“[The] changes provide a competitive offering for both property investors and owner-occupiers,” he said.

“The current low interest rate environment is driving competitive offers for home buyers, which, coupled with the new home loan incentives and discounts available, may make it an appealing time for Australians to start thinking about purchasing a home.”

Westpac is the latest lender to cut its home loan rates following the Reserve Bank of Australia’s (RBA) back-to-back cuts to the official cash rate in June and July, and amid a continued fall in wholesale funding costs.

Over the past few weeks, several lenders, including Westpac’s subsidiaries (Bank of Melbourne, BankSA and St.George Bank), have cut their mortgage rates by up to 160 bps.  

Mortgage rate reductions are expected to continue, with analysts forecasting at least one additional cut to the cash rate from the RBA by the end of the year.

[Related: Third rate cut ‘locked in’ for October despite fear of ‘spooking’ market]