Westpac lifts fixed rates by up to 0.8 percentage points

by Mina Martin27 May 2022

Westpac, Australia’s second largest lender, has raised fixed rates for owner-occupiers and investors, by up to 0.8 percentage points in some cases, while its subsidiaries St George, Bank of Melbourne, and Bank SA have also increased rates in all fixed-rate categories.

The rate changes mean Westpac no longer offers a fixed rate starting with a “2,” and now has the highest rates of the big four banks in all categories except the five-year rate for owner-occupiers paying principal and interest.

RateCity.com.au showed changes to Westpac’s lowest fixed rates for owner-occupiers paying principal and interest:

Rate type

Old rate

New rate

Difference

1-yr fixed

2.79%

3.59%

0.8%

2-yr fixed

3.69%

4.29%

0.6%

3-yr fixed

4.19%

4.69%

0.5%

4-yr fixed

4.39%

4.79%

0.4%

5-yr fixed

4.59%

4.89%

0.3%

Sally Tindall, RateCity.com.au research director, said “Westpac’s hikes are a sign of things to come.”

“Over the next few months we could see a number of the big banks’ longer-term fixed rates climb above the 5% mark, even on their most competitive loans,” Tindall said. “Westpac now has the highest fixed rates on offer for owner-occupiers paying principal and interest, however, that’s unlikely to last. The big banks love to play leapfrog in the fixed rate space. It’s only a matter of time before one of the others jumps right over them.”

According to the latest ABS lending indicator data, fixed rates have continued to fall out of favour. Just 22% of all new loans in March were fixed, down from the peak in July 2021 when 46% of new lending were fixed.