Westpac has become the first of the big four banks 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 home loan variable rates by 0.2 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 two years, reverting to 2.49 per cent thereafter.
It extends beyond the group’s flagship brand. St. George, Bank of Melbourne and BankSA have also all dropped their basic variable rates by 0.2 per cent. The subsidiaries also cut their two year fixed rates by 0.1 per cent.
However, it wasn’t all good news for people on the hunt for a new home loan. The group hiked its four and five year fixed rates by 0.3 per cent.
Analysis of the RateCity database shows while the majority of changes for fixed rates were hikes, particularly in the longer terms of three 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, according to RateCity research director, Sally Tindall.
“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,” Ms Tindall said.
“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.
“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.”