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Westpac woos new home loan customers with interest rate discounts

Westpac woos new home loan customers with interest rate discounts

Westpac is rolling out the red carpet to new customers by offering discounted interest rates on its home loans.

When Westpac’s recently-announced 14 basis point rate rise went into effect on 19 September 2018, Westpac also extended some of its introductory discount offers for new customers to last for the full length of the loan.

These offers include:

  • A 0.75% p.a. discount off the Flexi First Option Home Loan principal & interest repayment variable rate for the life of loan (interest rate 3.98%, comparison rate 3.99%).
  • A 0.80% p.a. discount off the Flexi First Option Investment Property Loan principal & interest repayment variable rate for the life of loan (interest rate 4.48%, comparison rate 4.49%).
  • A 0.71% p.a. discount off the Flexi First Option Investment Property Loan interest only repayment variable rate for the life of loan (interest rate 5.08%, comparison rate 5.09%).

To further sweeten the deal for new customers, Westpac has waived the $600 establishment fee for these home loan offers.

These special offers are only for new customers, and do not include mortgage holders refinancing within the Westpac group, which includes St.George and Bank of Melbourne.

Other recently-announced rate rises from CBA and ANZ are due to come into effect on 4 October 2018 and 27 September 2018 respectively.

Out of the four major banks, only NAB is keeping its interest rates steady for the time being.

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Fact Checked -

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.

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Learn more about home loans

What happens to my home loan when interest rates rise?

If you are on a variable rate home loan, every so often your rate will be subject to increases and decreases. Rate changes are determined by your lender, not the Reserve Bank of Australia, however often when the RBA changes the cash rate, a number of banks will follow suit, at least to some extent. You can use RateCity cash rate to check how the latest interest rate change affected your mortgage interest rate.

When your rate rises, you will be required to pay your bank more each month in mortgage repayments. Similarly, if your interest rate is cut, then your monthly repayments will decrease. Your lender will notify you of what your new repayments will be, although you can do the calculations yourself, and compare other home loan rates using our mortgage calculator.

There is no way of conclusively predicting when interest rates will go up or down on home loans so if you prefer a more stable approach consider opting for a fixed rate loan.

Does the Home Loan Rate Promise apply to discounted interest rate offers, such as honeymoon rates?

No. Temporary discounts to home loan interest rates will expire after a limited time, so they aren’t valid for comparing home loans as part of the Home Loan Rate Promise.

However, if your home loan has been discounted from the lender’s standard rate on a permanent basis, you can check if we can find an even lower rate that could apply to you.

What are the different types of home loan interest rates?

A home loan interest rate is used to calculate how much you’ll pay the lender, usually annually, above the amount you borrow. It’s what the lenders charge you for them lending you money and will impact the total amount you’ll pay over the life of your home loan. 

Having understood what are home loan rates in general, here are the two types you usually have with a home loan:

Fixed rates

These interest rates remain constant for a specific period and are a good option if you’re a first-time buyer or if you’re looking for a fixed monthly repayment. One possible downside of a fixed rate is that it may be higher than a variable rate. Also, you don’t benefit from any lowering of interest rates in the market. On the flip side, if rates go up, your rate won’t change, possibly saving you money.

Variable rates

With variable interest rates, the lender can change them at any time. This change can be based on economic conditions or other reasons. Changes in interest rates could be beneficial if your monthly repayment decreases but can be a problem if it increases. Variable interest rates offer several other benefits often not available with fixed rate home loans like redraw and offset facilities and free extra repayments. 

What is a standard variable rate (SVR)?

The standard variable rate (SVR) is the interest rate a lender applies to their standard home loan. It is a variable interest rate which is normally used as a benchmark from which they price their other variable rate home loan products.

A standard variable rate home loan typically includes most, if not all the features the lender has on offer, such as an offset account, but it often comes with a higher interest rate attached than their most ‘basic’ product on offer (usually referred to as their basic variable rate mortgage).