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Westpac cuts variable intro rate to 1.99% but hikes fixed rates

Westpac cuts variable intro rate to 1.99% but hikes fixed rates

Westpac has today become the first big four bank to offer a variable home loan rate under 2 per cent, however the rate is only introductory.

Australia’s second largest lender slashed its basic variable rates by 0.20 per cent for both owner-occupiers and investors paying principal and interest.

This takes Westpac’s lowest variable rate to 1.99 per cent for 2 years, reverting to 2.49 per cent thereafter. 

Today’s cuts extend beyond the group’s flagship brand – St. George, Bank of Melbourne and BankSA have all dropped their basic variable rates by 0.20 per cent. The subsidiaries also cut their 2-year fixed rates by 0.10 per cent.

However, it wasn’t all good news for people on the hunt for a new home loan. The group hiked its 4- and 5-year fixed rates by 0.30 per cent.

Westpac rate changes

Owner-occupiers paying principal and interest, 70% loan -to-value ratio or less

Rate typeOld lowest rateNew lowest rateChange
Basic variable loan (Flexi First)2.19% for 2 years, then 2.69%1.99% for 2 yrs, then 2.49%-0.20%
4 yr fixed2.19%2.49%+0.30%
5 yr fixed2.49%2.79%+0.30%

St. George, Bank of Melbourne rate changes

Owner-occupiers paying principal and interest, 60% loan-to-value ratio or less

Rate typeOld lowest rateNew lowest rateChange
Basic variable loan2.44%2.24%-0.20%
2 yr fixed1.89%1.79%-0.10%
4 yr fixed2.19%2.49%+0.30%
5 yr fixed2.49%2.79%+0.30%

For a full list of rate changes for owner occupiers and investors with different deposit sizes please contact us.

Analysis of the RateCity.com.au database shows while the majority of changes for fixed rates were hikes, particularly in the longer terms of 3 years and above, it was a completely different story for variable rates. 

In the last two months, 54 lenders have cut at least one variable rate, while just 10 lenders have made hikes to variable rates.

Lenders that have moved at least one fixed rate in the last 2 months 

(25 June to 24 Aug 2021)

Lenders that have cutLenders that have hikedCurrent lowest rate
Variable 5410

1.77% 

1 yr fixed2120

1.69% 

2 yr fixed2725

1.79% 

3 yr fixed1929

1.85% 

4 yr fixed625

2.14% 

5 yr fixed1026

2.27% 

Source: RateCity.com.au. Note some lenders have moved more than one rate.

RateCity.com.au research director, Sally Tindall said: “Westpac is looking for a bigger slice of the refinancing pie, which hit a record of more than $16 billion in the month of June according to the latest ABS figures.”

“Westpac is the first big four bank to offer a variable home loan rate starting with a ‘1’, and while the discount is only for the first two years, it reverts to a rate that’s still lower than its big four bank competitors,” she said.

“The bank was already competing fiercely in most fixed rate categories. Now it’s chasing variable rate customers who want both low rates and flexibility.

“While fixed rates are, by and large, on the rise, we are still seeing more cuts to variable rates than hikes, because for most banks, its typically the one place left with fat to cut.

“The variable rate cut from Westpac is reserved for new customers, however, that shouldn’t stop existing customers from picking up the phone and asking for a lower rate,” she said.

Lowest big four bank owner-occupier home loan rates

CBAWestpac*NAB ANZ
1 yr fixed

2.09%

1.99%

2.09% 

2.04%

2 yr fixed

1.99%

1.89%

1.99%

1.94%

3 yr fixed

2.19%

1.98%

2.08%

2.04%

4 yr fixed

2.29%

2.49%

2.24%

2.49%

5 yr fixed

2.99%

2.79%

2.49%

2.69%

Variable

2.69%

1.99% for 2 yrs then 2.49%

2.69%

2.72%

Source: RateCity.com.au. *Note: Westpac's rates are for a loan to value ratio of up to 70%. 

Lowest rates on the RateCity.com.au database

LenderRate
1 yr fixedGreater Bank

1.69%

2 yr fixedSt George/Bank of Melbourne/ Greater Bank

1.79%

3 yr fixed86 400

1.85%

4 yr fixedTeachers Mutual

2.14%

5 yr fixedFreedom Lend

2.27%

VariableReduce Home Loans

1.77%

Source: RateCity.com.auNote: Rates are for owner-occupiers paying principal and interest. Some LVR requirements apply. 

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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