AN Australian home loan war is well and truly on after banking giant Westpac was the second of the big four to move its home loan rates this month.
Just 11 days after ANZ moved its rate deals, the mortgage industry has been waiting for the other big banks to drop their rates and Westpac did exactly this.
Financial comparison website Mozo’s spokeswoman Kirsty Lamont said “the gloves are off” following Tuesday’s announcement and more rate moves are on the horizon.
While Westpac delivered good news for owner occupiers paying down their debts, it was bad news for investors opting for interest-only repayments.
Westpac dropped variable interest rates for owner occupiers paying principal and interest by eight basis points, bringing down the standard variable rate to 5.24 per cent, saving borrowers on a standard $300,000 30-year loan $15 per month.
This is the second lowest standard variable rate (SVR) for this type of loan among the big four behind ANZ.
But investors are again getting slammed for only paying interest-only — Westpac’s standard variable rate will climb by 34 basis points to 6.3 per cent and be the highest of the big four.
These changes kick in on June 30.
Ms Lamont said borrowers should expect more movements in the fiercely-competitive mortgage market in the weeks to come.
“APRA’s crackdown on riskier lending has spurred an all out mortgage rate war between lenders and interest-only borrowers are the biggest casualties,’’ she said.
“After hiking fixed rates for interest only loans in April, Westpac has dealt another nasty blow to interest only borrowers who are set to see their mortgage bill skyrocket by $85 a month.”
The banking regulator, the Australian Prudential and Regulation Authority’s announcement earlier this year limiting new-interest-only lending to 30 per cent of all new residential lending has resulted in banks hiking interest-only deals.
Mortgage Choice chief executive officer John Flavell said banks remained hot for customers paying principal and interest so they would continue to roll out competitive deals.
“All of Australia’s lenders are hungry for owner-occupier, principal and interest business at the moment and are willing to slash their rates in order to attract this type of customer,’’ he said.
“Owner occupiers who are making principal and interest repayments on their mortgage should take the time to look around and see if there is a better deal on the market.
“They are an appealing type of customer and should take advantage of this fact while they can.”
Westpac’s subsidiary banks including St George, Bank of Melbourne and BankSA also moved their rate deals on Tuesday.
HOME LOAN DEALS
Owner occupier P & 1
ANZ 5.2 per cent
CBA 5.25 per cent
NAB 5.32 per cent
Westpac 5.24 per cent (from June 30)
ANZ 6.26 per cent
CBA 5.94 per cent
NAB 5.9 per cent
Westpac 6.3 per cent (from June 30)