Westpac follows ANZ’s lead with interest-only home loan rate increases
20 Jun 2017
Westpac has increased rates on interest-only mortgages by 0.34%, following changes from fellow big bank ANZ which hiked interest-only rates by up to 0.30% earlier this month, in what is becoming a growing trend among home loan lenders.
Westpac’s rate increase applies to both investors and owner-occupiers, bringing the standard variable rate on interest-only lending up to 6.30% and 5.83% respectively, as of June 30.
On a $600,000 loan over a 25 year term, this 0.34% increase to 5.83% p.a. could cost a home buyer an extra $36,827 in interest, according to Mozo’s home loan repayment calculator.
On the other hand, rates on owner-occupier loans with principal and interest repayments were decreased by 0.08%, bringing the standard variable rate down to 5.24%. Given the same loan conditions as above - a $600,000 loan amount over 25 years - this represents a saving of $8,508.
The move was aimed at least in part to nudging customers toward making principal and interest repayments on their home loans instead of just paying down the interest, in response to APRA’s tightened regulations around “risky” lending, introduced earlier this year.
George Frazis, Chief Executive of Westpac Consumer Bank, said, “We hope the rate reduction will encourage owner occupier customers with interest only home loans to switch to principal and interest repayments, helping them to pay down their home loan in this low interest rate environment.”
He also said there would be no switching fee for interest-only home loan customers to make the change to principal and interest repayments.
RELATED: Is the Sydney property market starting to cool?
The changes are part of a growing trend that has taken hold since APRA announced regulations which limit the flow of new interest-only lending to 30% of a bank’s total new residential lending and also placed restrictions on the volume of low-deposit lending.
Earlier this month, CommBank subsidiary Bankwest and big bank ANZ both made similar adjustments to their home loan interest rates, increasing rates on interest-only borrowing, while making cuts on principal and interest loans.
Before that, in May, a number of lenders made moves that followed the same pattern of cuts for principal and interest borrowing combined with rate hikes for interest-only loans, including big bank NAB, which also quadrupled deposit requirements for interest only loans.
With so many shifts in the market, borrowers will need to do their research to ensure they’re getting the best deal around. If you’re looking for a mortgage to fund the purchase of your dream home, make sure you compare home loans using our handy tool, or check out some of the top offers below.
Top home loans - rates updated daily
-
Promoted
Hot Deal $0 application fee
UBank
3.59% p.a. variable
3.59% p.a.
$1234
Product details Close detailsUBank UHomeLoan - Discount Offer
Owner Occupier, Principal & Interest
3.59% p.a. variable
3.59% p.a.
Enjoy a low rate Home Loan with no bank fees on variable rate loans. Easy & fast to apply, simply choose between flexible repayments and make extra repayments for free. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category.
UHomeLoan - Discount Offer
Enjoy a low rate Home Loan with no bank fees on variable rate loans. Easy & fast to apply, simply choose between flexible repayments and make extra repayments for free. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category.
-
3.59% p.a. variable
-
3.59% p.a.
-
$0
-
$0.00
-
$0.00
-
yes - free
-
yes
-
no
-
80.00%
-
$200,000
-
$699,999
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
Read our Mozo Review to learn more about the UHomeLoan - Discount Offer
-
-
Promoted
HSBC 3.59% p.a. variable
3.61% p.a.
$1234
Product details Close detailsHSBC Discounted Home Value Loan
Owner Occupier, Principal & Interest
3.59% p.a. variable
3.61% p.a.
Enjoy a discounted rate for the life of the loan plus $0 establishment fee when you apply by 30 April (t&cs apply). Get help with the application process with an HSBC relationship manager. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category.
Discounted Home Value Loan
Enjoy a discounted rate for the life of the loan plus $0 establishment fee when you apply by 30 April (t&cs apply). Get help with the application process with an HSBC relationship manager. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category.
-
3.59% p.a. variable
-
3.61% p.a.
-
$150
-
$0.00
-
$300.00
-
yes - free
-
yes - free online
-
no
-
90.00%
-
$50,000
-
$7,500,000
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
Read our Mozo Review to learn more about the Discounted Home Value Loan
-
-
Promoted
Virgin Money3.69% p.a. variable
3.83% p.a.
$1234
Product details Close detailsVirgin MoneyReward Me Variable Rate Home Loan
Owner Occupier, Principal & Interest, LVR<80%
3.69% p.a. variable
3.83% p.a.
With a globally trusted name and competitive rates from 3.69% p.a., you'll be packing your bags with 20,000 Velocity Points for every $100,000 drawn at settlement with this Virgin Money Home loan.
Reward Me Variable Rate Home Loan
With a globally trusted name and competitive rates from 3.69% p.a., you'll be packing your bags with 20,000 Velocity Points for every $100,000 drawn at settlement with this Virgin Money Home loan.
-
3.69% p.a. variable
-
3.83% p.a.
-
$150
-
$10.00 monthly
-
$320.00
-
yes - free
-
yes - free
-
yes
-
80.00%
-
$750,000
-
-
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
Read our Mozo Review to learn more about the Reward Me Variable Rate Home Loan
-
-
Featured Product
ME3.89% p.a.
fixed 2 years4.90% p.a.
$1234
Product details Close detailsMEFlexible Home Loan
Fixed, Owner Occupier, LVR<80%, Principal & Interest
3.89% p.a.
fixed 2 years4.90% p.a.
Option to split your loan into fixed and variable. Offset available on the variable rate facility. Extra repayments up to $30K during fixed rate period
Flexible Home Loan
Option to split your loan into fixed and variable. Offset available on the variable rate facility. Extra repayments up to $30K during fixed rate period
-
3.94% p.a.
fixed 3 years -
4.87% p.a.
-
$400
-
$0.00
-
$350.00
-
yes - free up to $30,000 during fixed rate period
-
no
-
no
-
80.00%
-
$40,000
-
-
-
Fixed
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
Read our Mozo Review to learn more about the Flexible Home Loan
-
-
Featured Product
Heritage Bank3.67% p.a. variable
3.69% p.a.
$1234
Product details Close detailsHeritage BankDiscount Variable Home Loan
Owner Occupier, LVR<80%
3.67% p.a. variable
3.69% p.a.
Enjoy no monthly administration fees, and the ability to make extra repayments with Heritage Bank's Discounted Variable Rate Home Loan. Featuring a great low rate, experience the difference this established bank has to offer.
Discount Variable Home Loan
Enjoy no monthly administration fees, and the ability to make extra repayments with Heritage Bank's Discounted Variable Rate Home Loan. Featuring a great low rate, experience the difference this established bank has to offer.
-
3.67% p.a. variable
-
3.69% p.a.
-
$150
-
$0.00
-
$250.00
-
yes - free
-
yes - free
-
no
-
80.00%
-
$150,000
-
-
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
Read our Mozo Review to learn more about the Discount Variable Home Loan
-
Mozo may receive advertising fees from the financial institutions, issuers of financial or credit products and third party advice providers that are shown on this page. These fees are based on a cost per click, cost per acquisition, or a fixed fee.
