Westpac fixed rate home loans take dive to new lows

Westpac today slashed its fixed rate home loans by up to 20 basis points, a move that has seen the big bank join lenders with rates that start with '1'. 

Westpac’s 2-year fixed rate for owner occupiers making principal and interest repayments under its Premier Advantage Package dropped by 20 bp to 1.89% (3.46% comparison rate*), while its 3-year rate fell by 11 bp to 1.98% (3.38% comparison rate*). 

These reductions place Westpac’s two packaged fixed rates at the upper end of the Mozo database, with its 2-year offer now the best of the big four banks and the fourth most competitive overall. Meanwhile, its 3-year rate is now tied first with NAB among the big four.

Westpac today also sharpened its standard fixed rates for owner occupiers by 20bp for 2-year terms to 2.09% (4.27% comparison rate*), and by 11bp for 3-year terms to 2.18% (4.10% comparison rate*).

While those standard fixed rate cuts won’t be enough to push Westpac onto the leaderboard, it’s worth noting they do boost the big bank substantially above the 2-year and 3-year averages for owner occupiers in the Mozo database of 2.32% and 2.35%. 

The rate cuts don’t stop there. In line with the growing trend of lenders offering lower rates to borrowers with higher deposits, Westpac shaved an additional 10bp off fixed rate loans with LVRs up to 70%.  

In other words, owner occupiers with a larger deposit of at least 30% can now snag 2-year fixed rates as low as 1.79% (3.37% comparison rate*) on Westpac’s packaged home loan. Or for the standard option, the discount brings Westpac’s 2-year fixed rate down to 1.99% (4.17% comparison rate*). 

The rest of the Westpac Group also followed suit today, with St.George, Bank of Melbourne and BankSA experiencing similar fixed rate cuts of up to 20bp across its 2-year and 3-year offers.

To lock or not to lock my home loan? 

Since the Reserve Bank rate cut in November, home loans that start with ‘1’ have become the new norm with a vast majority of these offers belonging to the fixed rates cohort. So it’s no surprise why fixed rate loans have grown increasingly attractive to borrowers wanting to secure a top deal. 

But are there any catches to locking in your rate? 

While there are big pluses to fixing your loan such as consistent repayments, you will have to weigh up a few potential cons. For instance, if you intend to refinance again in the next few years, you may incur break costs for switching loans before your fixed period is over. There’s also the revert rate to watch out for, which could be twice as high as your current rate, but the good news is you can either re-fix or refinance at the end of your term to avoid being stung by the revert rate. 

If you’re interested in locking in a home loan, why not start by comparing the fixed rate deals below. Or head on over Mozo’s fixed rate comparison hub for even more competitive offers.