Westpac slashes lowest variable, as its fixed rates soar

by Mina Martin25 Mar 2022

Westpac has been the latest big four bank to slash its lowest variable rate, heating up competition in variable home loan rates.

The move follows NAB trimming its basic variable rate on March 9 and ANZ on Feb. 8.

Westpac’s lowest variable rate is now an “ultra-competitive” 2.09% for people with a 30% deposit, while both St George and Bank of Melbourne now offer 2.04% for borrowers with a 40% deposit. There is also a $3,000 cashback on offer for Westpac refinancers and $4,000 for the subsidiaries.

Westpac Group’s fixed rates continue to increase, however, with its one- to five-years rates for owner-occupiers and investors now up by 0.3%.

This brings Westpac’s four-year fixed rate for owner-occupiers paying principal and interest to 3.99%, a 2.1 percentage points increase to the 1.89% rate in April last year.

RateCity.com.au data showed Westpac home loan rate changes for owner-occupiers:

Rate type

Old rate

New rate

Change

Repayment difference $500k

Variable

2.19%

2.09%

-0.1%

-$25

1-yr fixed

2.69%

2.99%

0.3%

$80

2-yr fixed

2.89%

3.19%

0.3%

$81

3-yr fixed

3.44%

3.74%

0.3%

$84

4-yr fixed

3.69%

3.99%

0.3%

$86

5-yr fixed

3.99%

4.29%

0.3%

$87

Note: Above rates are for owner-occupiers paying principal and interest on a package rate. LVR requirements apply. Monthly repayments are on a $500,000 loan over 30 years.

“It’s astonishing to see some fixed rates rise by over two percentage points in the last 12 months, when the cash rate hasn’t moved a muscle,” said Sally Tindall, RateCity.com.au research director. “Westpac and other banks are responding to rising costs of funding and expected RBA hikes. As a result, the majority of big four bank owner-occupier fixed rates now start with a ‘3’, some even a ‘4.’ It’s no wonder the proportion of customers choosing to fix is plummeting.”

RateCity.com.au said variable rates were continuing on a different trajectory, for now.

“While now is a great time for variable-rate customers to be moving to a lower rate, people need to be acutely aware the RBA is poised to hike this year,” Tindall said. “A year ago, the battleground for the banks was still squarely set on fixed rates. However, record levels of mortgage holders are now locked into a fixed rate, and so banks have shifted their focus to variable rate customers looking to switch.”