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.
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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. Advertiser disclosure.
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Mozo experts choice awards won:
- Offset Home Loan - 2021
- Low Cost Home Loan - 2021
1.99% p.a.variable for 12 months and then 2.48% p.a. variable
2.47% p.a.
$1234
Product details Close detailsMozo experts choice awards won:
- Offset Home Loan - 2021
- Low Cost Home Loan - 2021
Smart Booster Home Loan
1 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR
1.99% p.a.variable for 12 months and then 2.48% p.a. variable
2.47% p.a.
A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends). 20% minimum deposit required. Winner of two Mozo Expert's Choice Award for 2021.
Smart Booster Home Loan
A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends). 20% minimum deposit required. Winner of two Mozo Expert's Choice Award for 2021.
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1.99% p.a.variable for 12 months and then 2.48% p.a. variable
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2.47% p.a.
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$520
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$0.00
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$0.00
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yes - free
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yes - free
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Optional - with 0.10% additional interest
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$520
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80.00%
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$50,000
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$1,000,000
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Variable
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Principal & Interest
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Owner Occupier
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Weekly, Fortnightly, Monthly
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Read our Mozo Review to learn more about the Smart Booster Home Loan
Details Close
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1.75% p.a.
fixed 3 years2.22% p.a.
$1234
Product details Close detailsUHomeLoan
Owner Occupier, Principal & Interest
1.75% p.a.
fixed 3 years2.22% p.a.
$0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.
UHomeLoan
$0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.
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1.75% p.a.
fixed 3 years -
2.22% p.a.
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$0
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$0.00
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$0.00
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yes - free up to $20,000 p.a.
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no
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no
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$0
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80.00%
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$100,000
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$2,000,000
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Fixed
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Principal & Interest
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Owner Occupier
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Weekly, Fortnightly, Monthly
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$395 Establishment fee waived for fixed rate loans that settle by 30 September 2022. Receive 1.75% 3 year fixed rate when you apply by 29 April 2021 and settle within 90 days.
Read our Mozo Review to learn more about the UHomeLoan
Details Close
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2.09% p.a.
fixed 3 years2.43% p.a.
$1234
Product details Close detailsBasic Home Loan
Fixed, Owner Occupier, Principal & Interest, LVR<70%
2.09% p.a.
fixed 3 years2.43% p.a.
Get a flexible loan structure with up to six loan accounts with different rate types. Make free extra repayments. Enjoy free redraw facility. No upfront or ongoing fees. Option to earn Qantas points.
Basic Home Loan
Get a flexible loan structure with up to six loan accounts with different rate types. Make free extra repayments. Enjoy free redraw facility. No upfront or ongoing fees. Option to earn Qantas points.
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2.09% p.a.
fixed 3 years -
2.43% p.a.
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$0
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$0.00
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$400.00
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yes - free
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yes - free
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no
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$0
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70.00%
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$150,000
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$750,000
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Fixed
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Principal & Interest
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Owner Occupier
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Monthly
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Read our Mozo Review to learn more about the Basic Home Loan
Details Close
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Mozo experts choice awards won:
- Home Loan Innovation - 2021
- Investor Home Loan - 2021
- Low Cost Home Loan - 2021
2.19% p.a. variable
2.19% p.a.
$1234
Product details Close detailsMozo experts choice awards won:
- Home Loan Innovation - 2021
- Investor Home Loan - 2021
- Low Cost Home Loan - 2021
Celebrate Variable Home Loan
<60% LVR, Owner Occupier, Principal & Interest
2.19% p.a. variable
2.19% p.a.
Fast and efficient online application. Automatic discounts as loan is paid off. Free extra repayments and redraw facility. Zero fees to consider. Min 40% deposit required. Winner of three Mozo Expert's Choice Award for 2021.
Celebrate Variable Home Loan
Fast and efficient online application. Automatic discounts as loan is paid off. Free extra repayments and redraw facility. Zero fees to consider. Min 40% deposit required. Winner of three Mozo Expert's Choice Award for 2021.
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2.19% p.a. variable
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2.19% p.a.
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$0
-
$0.00
-
$0.00
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yes - free
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yes - free
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no
-
$0
-
60.00%
-
$100,000
-
$2,000,000
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Variable
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Principal & Interest
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Owner Occupier
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Weekly, Fortnightly, Monthly
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Read our Mozo Review to learn more about the Celebrate Variable Home Loan
Details Close
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Hot Deal $3,000 cashback when you refinance with Virgin Money (T&Cs apply)
1.94% p.a.
fixed 2 years2.77% p.a.
$1234
Product details Close detailsSpecial Offer Reward Me Fixed Rate Home Loan
Owner Occupier, LVR <80%, 300k+
1.94% p.a.
fixed 2 years2.77% p.a.
Enjoy $3,000 cashback when you refinance with Virgin Money (T&Cs apply). Additional repayments up to $10,000 per annum. Reverts to the discounted variable rate on expiry of the fixed term.
Special Offer Reward Me Fixed Rate Home Loan
Enjoy $3,000 cashback when you refinance with Virgin Money (T&Cs apply). Additional repayments up to $10,000 per annum. Reverts to the discounted variable rate on expiry of the fixed term.
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1.94% p.a.
fixed 2 years -
2.77% p.a.
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$450
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$10.00 monthly
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$350.00
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yes - up to $10,000 per annum
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no
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no
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$450
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80.00%
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$300,000
-
-
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Fixed
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Principal & Interest
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Owner Occupier
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Weekly, Fortnightly, Monthly
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$3,000 cashback for new borrowings of at least $300,000, applications by 28 May 2021, settled by 27 August 2021.
Read our Mozo Review to learn more about the Special Offer Reward Me Fixed Rate Home Loan
Details Close
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^See information about the Mozo Experts Choice Home loans Awards