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Westpac customers hit with loyalty tax on home loans

·Personal Finance Editor
·3-min read
The westpac logo and an aerial view of property.
Westpac is offering a lower variable rate to new customers. (Source: Getty)

Westpac has passed on the Reserve Bank’s (RBA) full 0.5 per cent rate hike but new customers will not suffer the same fate.

In a move to generate new business, the bank increased its lowest variable rate by just 0.35 percentage points for new customers.

This takes the bank’s lowest variable to 3.49 per cent for 2 years, after which time it increases by 0.40 percentage points.

But there is a catch - in order to get this rate, borrowers will need to be new to the bank and own at least 30 per cent of their home.

Westpac’s lowest home loan rates

Rate type

Old rate

New rate

Change (% points)

Standard variable

5.73%

6.23%

+0.50%

Discounted variable

4.44%

4.94%

+0.50%

Lowest variable(new customers)

3.14% for 2yrs then 3.54%

3.49% for 2yrs then 3.89%


+0.35%

“Westpac’s new lowest variable rate at 3.49 per cent is extremely competitive, but it comes with plenty of catches,” RateCity.com.au research director Sally Tindall said.

“If you’ve got a home loan with Westpac, news that new customers are getting a better deal than you may be difficult to swallow.

“Why, as a loyal existing customer, should you be charged a higher rate than someone with no history with the bank?”

Tindall said, while it may be frustrating, there were things existing customers could do.

“Instead of getting angry, get even,” she said.

“Have a look at what your bank is offering new customers, but also what other lenders will offer you. If it’s lower, pick up the phone and ask the bank to cut you a better deal.”

Tindall said if your rate started with a ‘4’ or even a ‘5’ as an owner-occupier, then you should question why.

“It’s no secret [that] complacent existing customers get the raw end of the deal,” she said.

“In some cases, the gap between new and existing home loan rates within the same bank can be over 1 percentage point.”

Loyalty tax grows

Westpac is not the only lender to offer lower rates to new customers.

Since the RBA hikes began in May, 14 lenders have discounted variable rates for new customers, including:

  • CBA by 0.15 per cent on June 30

  • Macquarie Bank by up to 0.25 per cent on June 27

  • ING by up to 0.15 per cent on July 22

  • ME Bank by up to 0.15 per cent on July 20

  • BOQ by 0.14 per cent to 3.19 per cent on August 1

Banks are offering exclusive discounts to new customers to capitalise on the refinancing boom, according to RateCity.

Lowest variable rates

From lenders that have announced August RBA hikes.

Lender

Advertised rate

Loans.com.au

3.10%

P&N Bank

3.24%

G&C Mutual Bank

3.24%

Gateway Bank

3.24%

Bank of us

3.29%

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