Westpac revamps FHB offering

Westpac has revamped its first home buyer (FHB) proposition, in a bid to simplify its offering.

Effective from Tuesday, 11 June, Westpac has introduced the following loan offerings for owner-occupier FHBs, paying principal and interest:   

• Five-year Fixed Option Home Loan with its Premier Advantage Package, with an interest rate of 3.49 per cent (4.63 per cent comparison rate)
• Five-year Introductory Flexi First Option Home Loan with an interest rate of 3.88 per cent (3.95 per cent comparison rate). The product has no establishment fee or monthly account keeping fees.

However, as part of its decision to simplify its offering, the major bank has withdrawn the following products:

• Three-year Fixed Option Home Loan and Investment Property Loan
• Five-year Introductory Rate Flexi First Option Home and Investment Property Loan.

Westpac’s changes have come amid growing expectations of a spike in home loan demand from FHBs following the recent wave of mortgage rate cuts in response to the Reserve Bank’s decision to cut the official cash rate to a new record low of 1.25 per cent.

The RBA’s decision has prompted some lenders to drop rates to as low as 2.99 per cent – as offered by Greater Bank and UBank on their one-year owner-occupied fixed rates.

Non-bank lender Reduce Home loans has also announced the introduction of an owner-occupied variable home loan offering with an interest rate of 3.09 per cent, targeted at borrowers with 40 per cent deposit.

Mortgage House, which recently funded the launch of an owner-occupied variable home loan with an interest rate of 3.29 per cent through uno Home Loans, has also dropped its rate to 3.15 per cent in response to the RBA’s announcement.

Research director at RateCity.com.au Sally Tindall commented: “Ideal borrowers are increasingly being rewarded with lower rates. If you’re an owner-occupier paying down your debt with a bit of equity up your sleeve, you’re in the box seat when it comes to rates.

“If the RBA cuts again, we will almost certainly see variable rates drop below 3 per cent.”

 [Related: Owner-occupiers fuelling lending bounce]