Westpac has slashed fixed mortgage rates as the big banks fight for new customers ahead of an expected official rate cut next week.
Australia’s second biggest lender has cut its shorter-term fixed mortgage rates in a sign the major banks are expecting steep Reserve Bank rate cuts in 2025.
One-year fixed rates have been slashed by 40 basis points to 5.69 per cent while Westpac’s two-year fixed rates have fallen by 30 basis points to 5.59 per cent.
Both these fixed rates are much lower than Westpac’s introductory variable rate of 6.44 per cent.
Westpac has cut its fixed mortgage rates only a week after NAB also cut its fixed rates.
Canstar data insights director Sally Tindall said the major banks were competing for new customers, with the Big Four banks all expecting a Reserve Bank rate cut on Tuesday next week.
‘A cash rate cut is fast approaching, potentially as soon as next Tuesday,’ she said.
‘This, alongside an easing in the cost of wholesale funding is now pushing some banks to review their fixed rates, with more likely to follow.’
Westpac has slashed fixed mortgage rates as the big banks fight for new customers ahead of an expected official rate cut
Westpac and the Commonwealth Bank are both expecting the Reserve Bank to cut interest rates four times in 2025.
This would take the cash rate back to 3.35 per cent for the first time since March 2023, from an existing 4.35 per cent level.
Ms Tindall said borrowers who locked in a fixed rate now could end up missing out on even more generous relief, as RBA rate cuts led to lower variable rates.
Borrowers wanting to get out a fixed rate, for a lower variable rate, would have to pay a hefty break fee in the thousands of dollars.
‘While fixed rates can bring borrowers certainty, anyone who locks in their rate now will effectively be forfeiting their right to cash in on RBA cuts within their fixed rate term,’ Ms Tindall said.
‘After waiting well over a year for cash rate cuts to come, it’s hard to see many borrowers tossing this opportunity in.’
Westpac and Macquarie Bank now offer the lowest one-year fixed rate of 5.69 per cent.
But smaller lenders Bank Vic, Community First and Easy Street offer the lowest two-year fixed rate of 5.49 per cent.
Australian Mutual offers the lowest three-year fixed rate of 5.49 per cent while Newcastle Permanent offers the lowest four and five-year fixed rate of 5.59 per cent.
Among the Big Four banks, Westpac offers the lowest two-year fixed rate of 5.59 per cent while ANZ has the lowest three-year fixed rate of 5.74 per cent.
Australia’s second biggest lender has cut its shorter-term fixed mortgage rates in a sign the major banks are expecting steep Reserve Bank rate cuts in 2025 (pictured is Sydney’s Pitt Street Mall)
