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Westpac hikes new customer variable rates as NAB slashes rates for owner-occupiers with small deposits

Eden Radford avatar
Eden Radford
- 6 min read
Westpac hikes new customer variable rates as NAB slashes rates for owner-occupiers with small deposits

Australia’s second largest home loan lender, Westpac, has today increased new customer variable rates on its Flexi First Home Loan by 0.10 percentage points.

This is the third time the bank has increased variable rates for new customers since 1 March 2023 and the 22nd time a big four bank has increased at least one new customer variable rate in this time., outside of the RBA cash rate hikes.

This move means the big four banks no longer have an interest rate starting with a ‘5’.

Bucking the trend, NAB has today scrapped the tiered rates for different deposit sizes on its basic variable rate loan.

This means NAB has essentially cut the rate for owner-occupiers with deposits of less than 20 per cent by 0.70 percentage points from 7.19 per cent to 6.49 per cent.

As a result, NAB now has the lowest big four bank ongoing variable rate for customers with less than a 20 per cent deposit.

Westpac: today’s changes to its Flexi First Option home loan

For owner-occupiers paying principal and interest – contact us for other loan types

Deposit sizeOld rateNew rateChange % pts
30% or more5.99% for 2 yrs then +0.4%pts6.09% for 2 yrs then +0.4%pts+0.10
20% – 30%6.09% for 2 yrs then +0.4%pts6.19% for 2 yrs then +0.4%pts+0.10
Less than 20%6.39% for 2 yrs then +0.4%pts6.49% for 2 yrs then +0.4%pts+0.10

Source: RateCity.com.au

NAB: today’s changes to its Base Variable Rate home loan

For owner-occupiers paying principal and interest – contact us for other loan types

Deposit sizeOld rateNew rateChange
20% or more6.49%6.49%No change
Less than 20%7.19%6.49%- 0.70%

Source: RateCity.com.au

Big four banks’ lowest basic variable rates

For owner-occupiers paying principal and interest

Deposit sizeCBAWestpacNABANZ
40% or more6.34%6.09%
for 2 yrs then +0.4% pts
6.49%6.19%
30% - 40%6.44%6.09%
for 2 yrs then +0.4% pts
6.49%6.24%
20% - 30%6.54%6.19%
for 2 yrs then +0.4% pts
6.49%6.29%
10% - 20%6.89%6.49%
for 2 yrs then +0.4% pts
6.49%6.89%
Less than 10%7.59%6.49%
for 2 yrs then +0.4% pts
6.49%7.29%

Source: RateCity.com.au. Note: each bank’s LVR tiers vary slightly.

Outside of the big four banks there are still sharper rates available for customers with small deposits.

RateCity.com.au database shows the lowest advertised variable rate for a customer with less than a 20 per cent deposit is from both Tic:Toc and Community First Bank at 5.69 per cent.

Lowest ongoing variable rates for deposits of less than 20%

LenderRateMin deposit required
Tic:Toc5.69%10%
Community First Bank5.69%5%
Bendigo Bank5.72%10%

Source: RateCity.com.au.

NAB and Westpac cut select fixed rates

NAB has today cut its 2-year fixed rate for owner-occupiers paying principal and interest, leaving it with the lowest 2-year fixed rate out of the big four banks.

Meanwhile, Westpac and its subsidiaries St George, Bank of Melbourne and BankSA have cut their 2-year fixed rates for investors only (contact us for details).

NAB: today’s changes to its 2-year fixed rate

For owner-occupiers paying principal and interest

Deposit sizeOld RateNew RateChange
30% or more6.54%6.19%-0.35%
Less than 30%6.59%6.24%-0.35%

Source: RateCity.com.au

Big four banks’ lowest advertised fixed rates

Fixed termCBAWestpacNABANZ
1-yr6.59%6.49%6.59%6.54%
2-yr6.84%6.39%6.19%6.54%
3-yr6.29%6.39%6.39%6.39%
4-yr6.69%6.39%6.59%6.49%
5-yr6.69%6.69%6.69%6.59%

Source: RateCity.com.au

These rate reductions from NAB and Westpac follow on from cuts from CBA to fixed rates last month (August 11) in what could be an early sign some fixed rates are now on their way down.

That said, the RateCity.com.au database shows over the last month, the majority of fixed rate changes were hikes, rather than cuts.

Lenders that have changed at least one fixed rate in the last month

Fixed termLenders that have cutLenders that have hiked
1-yr618
2-yr1020
3-yr813
4-yr47
5-yr58

Source: RateCity.com.au. Note some lenders have changed more than one fixed rate.

RateCity.com.au research director, Sally Tindall, said: “This move by Westpac shuts the door on advertised variable rates under 6 per cent from the big four banks.”

“This is the 22nd hike to new customer rates from a big four bank since 1 March outside of the cash rate hikes, in a strategic move to walk away from the cut-throat competition in the home loan market,” she said.

“It’s unlikely we’ll see an advertised variable rate from a big four bank under 6 per cent until the RBA starts cutting the cash rate.

“While Westpac is swimming with the tide by hiking its basic variable loan for new customers, NAB is going against it, by cutting this rate for owner-occupiers with small deposits.

“This is an unusual move from Australia’s third largest home loan lender. For years, banks have been moving to a risk-based pricing system where borrowers with small deposits are slugged with higher rates.

“NAB is opening the door specifically to owner-occupiers with small deposits, who are often first home buyers madly searching for options to get a foot in the market.

“A low variable rate can help boost a new borrower’s chance of getting their mortgage approved, but buyers should be aware they’re likely to be offered a significantly lower rate if they look beyond the big four banks.

“NAB might have slashed its lowest variable rate for owner-occupiers with small deposits down to 6.49 per cent, but there are lenders out there willing to offer these borrowers rates as low as 5.69 per cent.

“Both Westpac and NAB are trailing in CBA’s footsteps by cutting select fixed rates. While this goes against the overall trend in the market, there’s every chance other lenders will now follow.

“NAB now has the lowest 2-year fixed rate out of the big four banks, but at 6.19 per cent, its still a far cry from the market leader at 5.49 per cent.

“This reshuffle of big four bank rates is a timely reminder for new borrowers to make sure their research is up to date, because rates can and do change daily,” she said.

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Product database updated 22 Jun, 2024

This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.