Westpac slashes home loan interest rates

Update: NAB has become the latest bank to make changes to its interest-only rates. It declared it will hike interest-only rates for investors and owner-occupiers by 35 basis points. This means the bank’s interest-only rate will become 6.25 percent for investors and 5.77 percent for owner-occupiers.

Westpac was the second of Australia’s four largest banks to move home loan rates this month. The announcement benefits owner occupiers who pay down their debts; it is, on the other hand, bad news for investors who prefer interest-only repayments.

Variable interest rates were reduced for owner occupiers who pay principal and interest by eight basis points. It brings down the standard variable rate to 5.24 percent, which means borrowers can save on a standard $300,000 30-year loan $15 every month.

Among the big four, it is the second lowest standard variable rate (SVR) for this type of loan. The changes are slated to take effect on June 30.

Westpac Consumer Bank chief executive George Frazis said they hope the rate reduction will encourage customers to switch to principal and interest repayments. He assured there will be no fee, Finder reports.

At the same time, standard variable rate will rise by 34 basis points to 6.3 percent. It is the highest of the largest banks. Westpac’s move comes 11 days after ANZ decided to move its rate deals.

Kirsty Lamont, spokeswoman for financial comparison website Mozo, said more rates moves are “on the horizon.” She anticipates more movements in the market in the coming weeks.

Earlier this year, the Australian Prudential and Regulation Authority announced limiting new-interest-only lending to 30 percent of all new residential lending. The announcement has led banks to hike interest-only deals.

John Flavell, chief executive officer of Mortgage Choice, said that banks remained hot for customers paying principal and interest for them to continue roll out some deals. He pointed out that all of the country’s lenders are interested for owner-occupier, principal and interest business this time. They would be willing to cut their rates to draw customers.

St George, BankSA and the Bank of Melbourne, Westpac’s subsidiary banks, also moved their rate deals on Tuesday. Mozo.com.au published the following home loan deals: Owner occupier P & 1, ANZ 5.2 percent, CBA 5.25 percent, NAB 5.32 percent, Westpac 5.24 percent (from June 30), Investors interest-only, ANZ 6.26 percent, CBA 5.94 percent, NAB 5.9 percent, Westpac 6.3 percent (from June 30).

Republished June 23, 2017, 11 AEST. The original version of this article was published June 22 9 a.m. AEST.

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