Westpac follows suit on Commonwealth Bank's fixed rate home loan increase

By @mik_mapa on
Westpac
Pedestrians walk past a logo of the Westpac Bank Corp on display in a window of a branch located in central Sydney, Australia, July 2, 2016. Reuters/David Gray

Westpac has announced that its home loan fixed rate would increase across its owner occupier and investment products. The bank made the announcement three days after Commonwealth Bank increased its fixed loan deals.

Interest-only fixed loans increase would be different between owner occupiers and investors. Owner occupiers would experience the worst hit as the rates increased by 30 basis points across 1, 2, 3 and 5 year fixed deals. For investors, the rates would rise by 10 basis points across 1, 2, 3 and 5 year loan terms. The three-year fixed rate loan for owner occupier interest-only loans would rise to 4.56 percent by 30 basis points. Two-year fixed loan rates, however, would drop by 11 basis points to 3.88 percent.

Other loan terms that were also unaffected by the move included the investor principal and interest deals that would remain unchanged for 1, 3 and 5 year loan terms. Owner occupiers with principal and interest repayments would be spared across the 1, 3, and 5 year deals. St. George and Bank SA were also experiencing the changes in their fixed rate deals. 

1300homeloans director John Kolenda said that he has never seen anything like the current market conditions where rates rose across different bank products. He noted that the rate deals increased because the banks simply wanted to boost their margins. Mozo’s spokeswoman Kirsty Lamont said that they have seen 28 lenders in total that were pushing up fixed rate deals since the start of April.

A Westpac spokesperson said that the increase and decrease of rates were in response to the recent regulatory changes. The spokesperson said the bank was reducing some of its fixed rates by up to 0.31 percent for customers who made principal and interest repayments. He said that the reduction was also made to encourage customers to pay down their home loan in a low-interest rate environment.

Commonwealth Bank's rate changes affected both owner occupier and investors. The rate increase by 0.5 percent and it would be across 1, 2, 3, 4 and 5 year fixed terms. The interest-only investment loans would be the worst hit by the changes. The bank has announced that owner signing up to principal and interest fixed home loan deals were not affected by the changes. 

The changes for three-year fixed rate interest-only owner occupier would be 4.49 increase by 0.25 percent. For the three-year rate interest-only investment loan rates, it would be a rise to 4.94 percent by 0.5 percent and for the three-year principal and interest investment loan rates it would rise to 4.69 percent by 0.25 percent.

Westpac markets update with Sean Callow 

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