Westpac dips variable under 2%, but raises fixed home loan rates

by Mike Wood24 Aug 2021

Westpac has become the first Big Four bank to put its basic variable loan beneath the symbolic 2% barrier by shaving 20pts off their rate, while raising their long-term fixed rates.

The offer is only available on an introductory basic, but will apply to both owner-occupiers. It will offer 1.99% for the first two years, rising to 2.49% thereafter. Previously, it sat at 2.19% then 2.69%.

With the new rates for outside customers with a loan-to-value ratio of 70%, it is a clear play for the growing refinancing market from Westpac.

The new rate will only be available through Westpac, though the subsidiaries of Westpac Group – St George Bank, Bank of Melbourne and BankSA – have also cut their variable rates from 2.44% to 2.24%.

These changes now make Westpac the cheapest option among the Big Four in terms of variable rates. Their 1.99% introductory, 2.49% after two-year offer puts them below CBA and NAB (both 2.69%) and ANZ (2.72%) in the variable interest rate category.

In fixed rates, however, Westpac has gone in the opposite direction. They have hiked their four- and five-year rates across their own brand and their subsidiaries.

Four-year interest rates have risen 30pts, from 2.19% to 2.49%, with five-year rates going up from 2.49% to 2.79%.

This is in line with the wider trend in the industry, and tied to the generalised rise in the price of money that kicked in with the new term funding period that began at the start of July.

Westpac remain the only Big Four bank with a one-year fixed rate lower than 2%, and the cheapest two-year rate, at 1.89%. ANZ is offering 1.94%, while CBA and NAB are at 1.99%

READ MORE: What the term funding period means for interest rates in Australia