One of the big four cut its basic variable rate before the weekend, now boasting the lowest variable home loan available from a major Australian bank.
Westpac’s reduced offering is intended to woo new borrowers to the brand following the publication of recent statistics from APRA which revealed the group has posted a drop in their home loan book.
The group’s Flexi First Option Home Loan has a new rate of 2.69% for loans with an LVR less than 70%, down from 2.93%. For those above 70%, the rate has dropped from 3.03% to 2.79%.
According to RateCity.com.au research director Sally Tindall, Westpac taking action to go from the major with the highest basic variable rate to the lowest was not unexpected.
“[The] rate cut is designed to get new business in the door. Westpac Group’s home loan book has fallen month on month, according to the latest APRA statistics. They need new customers to keep moving in the right direction,” she explained.
However, it may be possible for existing customers to use the reduction for new borrowers as leverage to secure a better deal for themselves.
“While these rate cuts are reserved for new customers, if you’ve already got a loan with Westpac you can still pick up the phone and ask for a rate cut,” said Tindall.
“If you’re paying more than what the bank is offering new customers for exactly the same loan, you’ve got the perfect bargaining chip," she added.
As of early June, the three lowest variable rates on the RateCity.com.au database are reserved for owner occupiers paying P&I who have at least a 30% to 40% deposit.
“Increasingly, banks are reserving their lowest rates for new customers who have a decent amount of equity up their sleeve,” said Tindall.
“If you’re an owner occupier who has made decent headway into your loan and still have a steady job, you are in the drivers’ seat in this current market.”
