Westpac and its subsidiary banks have launched an aggressive round of mortgage interest rate cutting, with reductions of as much as 130 basis points.
Effective today, Westpac’s four-year investment fixed option (interest only) was cut 130 bps to 3.79 per cent.
Westpac’s basic variable rate, for owner occupiers, was cut 15 bps to 3.43 per cent. Its principal and interest variable rate for investors was cut 34 bps to 3.74 per cent and its interest only variable rate for investors was cut 44 bps to 3.99 per cent.
St George Bank and Bank of Melbourne cut rates by up to 39 bps, while BankSA cut its interest only basic variable rate for investors by 44 bps to 3.99 per cent.
The chief executive of comparison site InfoChoice.com.au, Vadim Taub, said: “The rates from the online lenders are too low to ignore. The big banks are reacting.”
The lowest rates on the InfoChoice database are for loans offered by Well Home Loans – 2.74 per cent for two and three-years terms.
InfoChoice reported that Heritage Bank also cut rates yesterday, reducing a number of fixed rates. Its lowest rate is now 2.99 per cent for a three-year owner occupier package loan.
Canstar’s finance expert Steve Mickenbecker said: “Westpac is taking advantage of lower longer term funding costs to put competitive offers in the market.
“With larger cuts being offered to investors, the clock is being wound back further on the heavy penalties applied to investors two years ago. Investors in some cases are paying only 20 bps more than owner occupiers.
“For interest only borrowers with four and five-year terms, the position has been reversed. The owner occupier rate is now 20 bps higher than the investor rate. Westpac is seeing investors as the route to growth.”
Canstar reported that there were 686 cuts to variable and fixed rates by 48 lenders in August, and only five increases. The average rate reduction on owner occupier variable rates was 35 basis points. The average fixed rate reduction was 38 basis points.
According to Mozo, Well Home Loans is offering the best two and three-years fixed rates.
A number of lenders are offering 2.99 per cent for four years. They include BankSA, Bank of Melbourne, Greater Bank and St George Bank.
The best five-year rate – 2.99 per cent – is being offered by Citibank, Greater Bank, BankSA, Bank of Melbourne and St George.
RateCity says the average three-year fixed rate for owner occupier on its database is 3.5 per cent.
The lowest variable rate is Reduce Home Loans’ offer of 2.79 per cent.