Westpac joins NAB in dropping fixed rate home loans
Westpac has cut select fixed rate home loans by 0.80% p.a., making it the second Big Four bank to pull back on its fixed interest rates in the past month.
The bank’s fixed interest rates now start at 5.89% p.a. for owner-occupiers with a loan-to-value ratio (LVR) of up to 70% (that’s a deposit of at least 30% for first-home buyers).
Here’s a closer look at the changes Westpac has made to its discounted fixed rate packages:
- 1 year cut by 60bp to 6.09% p.a. (7.62% p.a. comparison rate*)
- 2 years cut by 60bp to 5.89% p.a. (7.45% p.a. comparison rate*)
- 3 years cut by 70bp to 5.89% p.a. (7.32% p.a. comparison rate*)
- 4 years cut by 70bp to 5.89% p.a. (7.19% p.a. comparison rate*)
- 5 years cut by 80bp to 5.89% p.a. (7.08% p.a. comparison rate*)
Most of Westpac’s fixed interest rates are now less than 6% for those who meet the conditions, which could make fixed rate home loans more attractive to borrowers.
In addition to having an LVR of at least 70%, borrowers also need to pay an annual fee of $395 to qualify for Westpac’s discounted fixed interest rates.
What’s happening to fixed rates?
Westpac’s newly reduced interest rates come less than a month after NAB ended the stalemate and cut its fixed rates – NAB was the first of the major banks to move since the Reserve Bank of Australia (RBA) hiked the cash rate to 4.35% in November 2023.
Commonwealth Bank and ANZ have yet to lower their fixed rates, but Mozo’s spokesperson, Rachel Wastell, says it’s possible they’ll start shifting rates soon.
She notes CommBank is the only Big Four bank still predicting the RBA will cut the cash rate in 2024, which could be an indication of how the lender will handle its interest rates offering.
Here’s a look at fixed interest rate home loans across the four major banks.
| Major Bank | 1 Year Rate % (p.a.) | 2 Year Rate % (p.a.) | 3 Year Rate % (p.a.) | 4 Year Rate % (p.a.) | 5 Year Rate % (p.a) |
| Westpac | 6.09 (7.62*) | 5.89 (7.45*) | 5.89 (7.32*) | 5.89 (7.19*) | 5.89 (7.08*) |
| ANZ | 6.69 (7.20*) | 6.54 (7.10*) | 6.59 (7.06*) | 6.74 (7.07*) | 6.84 (7.07*) |
| Commonwealth Bank | 6.59 (8.28*) | 6.84 (8.18*) | 6.59 (7.99*) | 6.69 (7.91*) | 6.69 (7.81*) |
| NAB | 6.69 (6.87*) | 6.59 (6.84*) | 5.99 (6.65*) | 6.74 (6.86*) | 6.79 (6.88*) |
Source: mozo.com.au as at 21 August 2024, based on 70% LVR owner occupier home loan paying principal interest on a $400,000 loan.
Borrowers should make a point to compare home loans – both fixed and variable – before locking in to fixed terms.
“The downward trend for fixed rates is making these home loan products increasingly attractive for mortgage holders,” says Wastell.
“However, borrowers need to consider the impact of locking in a comparably ‘low’ rate now, given the RBA is predicted to start cutting the cash rate in the next year.
“There are pros and cons to fixed rates that borrowers should be considering as some of the leading fixed rates from the Big Four banks start to come down below 6%.
“While opting for a fixed rate loan now has its advantages, offering protection against rate hikes, there’s also the risk you could miss out on savings after a rate cut,” she says.
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
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