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Westpac the third big bank to slash fixed rates

Westpac the third big bank to slash fixed rates

Westpac now has the lowest 2-year fixed rate in the market at 1.79 per cent.

Australia’s second largest bank has today slashed up to 0.20 per cent off its 2- and 3-year fixed rates home loans for new owner-occupiers, and its 2-year investor fixed rates.

Today’s fixed rate cuts from Westpac

Fixed ratesYesterdayTodayDifference
2 year (lowest)1.99%1.79%-0.20%
3 year (lowest)1.99%1.88%-0.11%

Note: above rates are for owner occupiers paying principal and interest with a LVR ratio of 70 per cent or less on a package loan.

The Westpac Group’s St. George, Bank of Melbourne and BankSA have also dropped some fixed rates by up to 0.20 per cent today (please get in touch for full details.)

Today’s cuts from Westpac follow similar moves from big four banks ANZ and NAB who also cut fixed rates in the last month.

RateCity.com.au database shows:

  • 44 lenders have cut home loan rates since Jan 1
  • 15 lenders have hiked home loan rates since Jan 1
  • 57 lenders have home loan rates under 2%, including three of the big four banks.

Sally Tindall, research director at RateCity.com.au, said, “Westpac has thrown down the gauntlet to its competitors today proving there’s still heat in fixed rate market.”

“While we’re nearing the bottom of the rate cycle, provided the cash rates remains above zero, it’s likely there’ll be more cuts in the weeks to come as banks compete for the record levels of new lending coming through the door,” she said.

“Lenders are currently in a strong position to offer low fixed rates, which also have the benefit of locking a customer in for the fixed term.

“Westpac is offering the lowest two- and four-year fixed rates in the market – an unusual position for a big four bank.

“CBA’s home loans are starting to look outdated with just one fixed rate under 2 per cent.

“Westpac group is reserving its sharpest rates for people who own at least 30 per cent of their home.

“Property price rises aren’t just helpful for people planning to sell, if you’ve had your home loan for a few years you might find you have more equity than you think and qualify for one of these low-rate loans,” she said.

Lowest rates on RateCity.com.au database:

Lowest ratesLenderMarch 2021
1 yr fixedGreater Bank

1.69% 

2 yr fixedWestpac, St George, Bank of Melbourne

1.79% 

3 yr fixedUBank

1.75% 

4 yr fixedWestpac, St George, Bank of Melbourne

1.89% 

5 yr fixedAussie Home Loans

1.99% 

Lowest variableHomestar, Reduce 

1.79% 

Source: RateCity.com.au. Rates are for owner occupiers paying principal and interest. Some LVR requirements apply.

Big four banks – lowest owner-occupier rates 

CBAWestpacNAB ANZ
1 year fixed

2.19%

1.99%

2.09% 

2.04%

2 year fixed

2.14%

1.79%

2.04%

2.04%

3 year fixed

2.14%

1.88%

1.98%

2.04%

4 year fixed

1.99%

1.89%

1.98%

2.24%

5 year fixed

2.99%

2.19%

2.24%

2.24%

Lowest variable rate

2.69%

2.19% for 2 yrs then 2.69%

2.69%

2.72%

Source: RateCity.com.au

Note: Westpac's rates are for a loan to value ratio of 70%.

Extra repayments – fixed rate caps from the big four banks

  • CBA: up to $10,000 per year
  • Westpac: up to $30,000 per fixed rate term
  • NAB: up to $20,000 per fixed rate term
  • ANZ: 5% of the loan balance or $5,000 per year, whichever is less. (The 5% is calculated at the start of the fixed period).

Things to consider before fixing

  • Will I want to make extra repayments? Most banks have caps on how much extra you can repay while on a fixed rate.
  • Do I need an offset account? Most banks don’t offer an offset account on their fixed rates.
  • Will I need to get out of the loan early? There can be hefty break fees if you do.
  • What is the revert rates? If you do fix, make a note of when the fixed term ends so you can negotiate a lower variable rate, refix or refinance. If you set and forget your fixed rate for the long term it could end badly.

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

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