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
loans.com.au2.88% p.a. variable
2.90% p.a.
$1234
Product details Close detailsloans.com.auSmart Home Loan
Owner Occupier, Principal & Interest
2.88% p.a. variable
2.90% p.a.
A low-rate home loan that could save you thousands. No application or ongoing fees. Unlimited additional repayments. Unlimited free redraws with no minimum redraw amount, Limited time only.
Smart Home Loan
A low-rate home loan that could save you thousands. No application or ongoing fees. Unlimited additional repayments. Unlimited free redraws with no minimum redraw amount, Limited time only.
-
2.88% p.a. variable
-
2.90% p.a.
-
$520
-
$0.00
-
$0.00
-
yes - free
-
yes - free
-
no
-
80.00%
-
$50,000
-
$1,000,000
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
-
Read our Mozo Review to learn more about the Smart Home Loan
-
-
Promoted
UBank
2.84% p.a. variable
2.84% p.a.
$1234
Product details Close detailsUBank UHomeLoan - Discount Offer
Owner Occupier, Principal & Interest
2.84% p.a. variable
2.84% p.a.
Free redraw with flexible repayments. Min 20% deposit. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category^.
UHomeLoan - Discount Offer
Free redraw with flexible repayments. Min 20% deposit. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category^.
-
2.84% p.a. variable
-
2.84% p.a.
-
$0
-
$0.00
-
$0.00
-
yes - free
-
yes - free
-
no
-
80.00%
-
$200,000
-
-
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
-
Read our Mozo Review to learn more about the UHomeLoan - Discount Offer
-
-
Promoted
Athena2.84% p.a. variable
2.80% p.a.
$1234
Product details Close detailsAthenaVariable Home Loan
Owner Occupier, Principal & Interest
2.84% p.a. variable
2.80% p.a.
Get the low rate you deserve with Athena, one of Australia's newest direct lenders. No fees and fee-free redraw. The same low rates for new and existing customers. Score loyalty bonus for making repayments. Min 20% deposit.
Variable Home Loan
Get the low rate you deserve with Athena, one of Australia's newest direct lenders. No fees and fee-free redraw. The same low rates for new and existing customers. Score loyalty bonus for making repayments. Min 20% deposit.
-
2.84% p.a. variable
-
2.80% p.a.
-
$0
-
$0.00
-
$0.00
-
yes - free
-
yes - free
-
no
-
80.00%
-
$100,000
-
$2,000,000
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
-
Read our Mozo Review to learn more about the Variable Home Loan
-
-
Promoted
Tic:Toc 2.79% p.a. variable
2.80% p.a.
$1234
Product details Close detailsTic:Toc Variable Home Loan
Owner Occupier, Principal & Interest
2.79% p.a. variable
2.80% p.a.
Get full approval online. Award-winning platform could save you thousands with super-low rates. No application, valuation or settlement fees. Fee-free redraws and extra repayments. Optional offset account for $10 per month. Winner of a Mozo Experts Choice Award 2019 for Online Home Lender of the Year 2019.^
Variable Home Loan
Get full approval online. Award-winning platform could save you thousands with super-low rates. No application, valuation or settlement fees. Fee-free redraws and extra repayments. Optional offset account for $10 per month. Winner of a Mozo Experts Choice Award 2019 for Online Home Lender of the Year 2019.^
-
2.79% p.a. variable
-
2.80% p.a.
-
$0
-
$0.00
-
$325.00
-
yes - free
-
yes - free
-
Optional - $10 per month
-
90.00%
-
$50,000
-
$2,000,000
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
-
Read our Mozo Review to learn more about the Variable Home Loan
-
-
Promoted
Homestar2.74% p.a. variable
2.77% p.a.
$1234
Product details Close detailsHomestarStar Essentials Home Loan
Owner Occupier, Principal & Interest
2.74% p.a. variable
2.77% p.a.
One of the lowest home loan rates in town packed with essential features. No application or ongoing fees. Unlimited additional repayments with free online redraws. Min. loan size $150k, no construction loans.
Star Essentials Home Loan
One of the lowest home loan rates in town packed with essential features. No application or ongoing fees. Unlimited additional repayments with free online redraws. Min. loan size $150k, no construction loans.
-
2.74% p.a. variable
-
2.77% p.a.
-
$596
-
$0.00
-
$535.00
-
yes - free
-
yes - free
-
no
-
80.00%
-
$150,000
-
$850,000
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
-
Read our Mozo Review to learn more about the Star Essentials 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.
