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Westpac the last of the big 4 banks to lift rates post-RBA, with a surprise twist
Westpac has today passed on the RBA’s August 0.50 percentage point hike in full to its variable home loan customers.
However, in a move to generate new business, the bank has only increased its lowest variable rate by 0.35 percentage points for new customers.
This takes the bank’s lowest variable to 3.49 per cent for 2 years, after which time it increases by 0.40 percentage points. In order to get this rate, borrowers will need to be new to the bank and own at least 30 per cent of their home.
Today’s changes – Westpac’s lowest home loan rates
| Old rate | New rate | Change (% points) | |
| Standard variable | 5.73% | 6.23% | +0.50% |
| Discounted variable | 4.44% | 4.94% | +0.50% |
| Lowest variable
(new customers) | 3.14% for 2yrs then 3.54% | 3.49% for 2yrs then 3.89% | +0.35% |
Source: RateCity.com.au. Home loan rates are for owner-occupiers paying principal and interest with a 70% LVR.
Loyalty tax grows amid record refinancing
Westpac is not the only lender to offer lower rates to new customers.
Since the RBA hikes began in May, 14 lenders have discounted variable rates for new customers, including:
- CBA by 0.15% points on 30 June.
- Macquarie Bank by up to 0.25% points on 27 June.
- ING by up to 0.15% points on 22 July.
- ME Bank by up to 0.15% points on 20 July.
- BOQ by 0.14% points to 3.19% on 1 Aug.
Banks are offering exclusive discounts to new customers to capitalise on the refinancing boom.
The latest ABS statistics shows the value of external refinancing in June is $7.44 billion (69 per cent) higher than it was at the start of the pandemic, hitting a new record high of $18.16 billion.
| Total (June 2022) | Change from previous month | Change since COVID (March 2020-June 2022) |
| $18.16 billion RECORD HIGH | $1.06 billion | $7.44 billion |
Source: ABS Lending Indicators June 2022, released 2 August 2022, seasonally adjusted data. Annual change is June 2021 to June 2022.
Source RateCity.com.au, ABS Lending Indicators June 2022, released 2 August 2022, seasonally adjusted data.
What is the gap between new and existing customer rates?
Analysis from RateCity.com.au shows someone who took out a loan at the start of the pandemic, at the average lowest big four bank rate, would be paying 0.89 percentage points more than a new customer today.
New customer vs existing customer variable rates
Assumes customer took out loan on 1 March 2020 and has not negotiated since
| Lender | New customer rate | Existing customer rate (estimate) | Difference (% points) |
| CBA | 3.79% | 4.72% | 0.93% |
| Westpac | 3.49% for 2 years then 3.89% | 4.68% | 1.19% for 2 yrs then 0.79% |
| NAB | 3.94% | 4.59% | 0.65% |
| ANZ | 3.69% | 4.47% | 0.78% |
| Big four average | 3.73% | 4.62% | 0.89% |
Source: RateCity.com.au. Rates are for owner-occupiers paying principal and interest. LVR restrictions may apply. Big four bank average new customer rate includes Westpac’s intro rate.
RateCity.com.au research director, Sally Tindall, said: “Westpac’s new lowest variable rate at 3.49 per cent is extremely competitive, but it comes with plenty of catches.”
“This rate is exclusively reserved for new customers with a decent amount of equity in their home. The discount also only lasts for two years, after which time it automatically jumps up by 0.40 percentage points,” she said.
“If you’ve got a home loan with Westpac, news that new customers are getting a better deal than you may be difficult to swallow. Why, as a loyal existing customer should you be charged a higher rate than someone with no history with the bank.
“Instead of getting angry, get even. Have a look at what your bank is offering new customers, but also what other lenders will offer you. If it’s lower, pick up the phone and ask the bank to cut you a better deal.
“Once the August hikes filter through, a competitive interest rate for owner-occupiers is likely to be around 3.50 per cent. If your rate starts with a ‘4’ or even a ‘5’ as an owner-occupier, then you’ll really should question why.
“It’s no secret complacent existing customers get the raw end of the deal. In some cases, the gap between new and existing home loan rates within the same bank can be over 1 percentage point,” she said.
Lowest variable rates
From lenders that have announced August RBA hikes
| Lender | Advertised rate |
| Loans.com.au | 3.10% |
| P&N Bank | 3.24% |
| G&C Mutual Bank | 3.24% |
| Gateway Bank | 3.24% |
| Bank of us | 3.29% |
Source RateCity.com.au.
Westpac savers get another boost in August
Westpac has also hiked its savings accounts by up to 0.55 percentage points today, including the Bump account that the bank previously hadn’t announced.
Sally Tindall said: “It’s great to see Westpac lifting its key savings accounts by the full 0.50 percentage points or more.”
“At 3.25 per cent, Westpac’s Spend&Save account for young adults is one of the highest ongoing savings rates on our database,” she said.
Westpac savings rates changes
| Old max rate | New max rate | Change | |
| Life | 1.35% | 1.85% | +0.50% |
| Spend&Save (ages 18-29) | 2.75% | 3.25% | +0.50% |
| eSaver | 1.25% for 5 mths then 0.30% | 1.80% for 5 mths then 0.85% | +0.55% |
| Bump (ages under 18) | 1.20% | 1.70% | +0.50% |
Source: RateCity.com.au. Note: conditions and balance caps apply for maximum rate on select accounts.
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Product database updated 27 Apr, 2024
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