Westpac slashes variable rates for new customers

Westpac has shaved the rate on its basic home loan for new customers – the third bank to do so in just over a week, after rivals CBA and ANZ – as existing customers face their eighth hike.

Westpac’s Flexi First Option home loan rate has dropped down by 0.1 percentage points for owner-occupiers and investors who are new Westpac customers, while new customers of subsidiaries of St George, Bank of Melbourne, and BankSA will see the rates on their basic loans cut by 0.1 pp.

As a result, Westpac’s lowest variable rate after the December RBA hike takes effect will be 4.64% for the first two years, increasing by 0.4 pp thereafter – an offer only available to owner-occupiers who already own at least 30% of their property, based on today’s values.

RateCity.com.au analysis showed that CBA, Westpac, and ANZ were not the only banks discounting new customer variable rates. Since the RBA hikes began in May, 38 lenders have cut at least one variable rate for new customers.

During this period, the majority of existing variable rate customers will have seen their rates lift by three percentage points, once the December RBA hike takes effect.

Someone who took out one of the big four banks’ lowest variable rates in December 2021 would now be on a rate that is, on average, 0.44 pp higher than what is on offer to new customers – that’s nearly two standard RBA hikes more and could equate to an estimated $2,210 extra in interest over the next year for a $500,000, 25-year loan today, RateCity.com.au analysis showed.

“Australia is going through a refinancing boom that is set to continue in 2023 as borrowers come off their fixed-rate loans,” said Sally Tindall, RateCity.com.au research director. “It’s no surprise the banks are undercutting each other to offer the most attractive rates to potential new customers.”

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