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Westpac bank HIKES rates, makes record move

·2-min read
Australian big four bank logos on pillars, Australian cash.
Westpac has hiked fixed rates. (Images: Getty).

Westpac has hiked its four- and five-year fixed rates by 0.30 per cent, while slicing 0.20 per cent off its variable rates. 

The decision to cut its basic variable rates for both investors and owner-occupiers means Westpac now offers a two-year variable rate of 1.99 per cent, making it the first major bank to offer a sub-2 per cent variable rate. 

However, this rate is only an introductory rate, with the interest rate reverting to 2.49 per cent after the two-year period. 

“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,” RateCity.com.au research director Sally 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.”

She said customers are seeing more cuts to variable rates, generally because it’s one of the few areas where banks can still reduce rates. 

“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.

These are the rate changes: 

Rate type

Old lowest rate

New lowest rate

Change

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 fixed

2.19%

2.49%

+0.30%

5 yr fixed

2.49%

2.79%

+0.30%

Source: RateCity.com.au

The interest rate changes also apply to St. George and Bank of Melbourne interest rates for owner-occupiers paying principal and interest loans with a 60 per cent loan-to-value ratio or less. 

Rate type

Old lowest rate

New lowest rate

Change

Basic variable loan

2.44%

2.24%

-0.20%

2 yr fixed

1.89%

1.79%

-0.10%

4 yr fixed

2.19%

2.49%

+0.30%

5 yr fixed

2.49%

2.79%

+0.30%

Source: RateCity.com.au

However, even with these most recent rate cuts, Westpac doesn’t have the cheapest rates on the market. 

Reduce Home Loans has the lowest variable rate at 1.77 per cent, while Greater Bank offers the lowest fixed rate at 1.69 per cent for a one-year rate. 

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