Westpac has slashed variable mortgage rates in a sign the Big Four banks are set to battle even harder for new borrowers in coming months.
Australia’s second biggest bank has trimmed its Flexi First Option special mortgage rate by 35 basis points, taking it down to 5.84 per cent.
This is the lowest among the Big Four banks, and follows the Reserve Bank of Australia’s February rate cut.
A borrower with an average, $600,000 mortgage would save $128 on monthly mortgage repayments compared with Westpac’s previous lowest variable rate.
This Westpac product is available to borrowers who apply online and have a heftier 30 per cent mortgage deposit.
Canstar insights director Sally Tindall said Westpac and ANZ now had the equally lowest variable rate, in a sign of intensifying competition for mortgage refinanciers with more savings.
‘Westpac has gone head-to-head with ANZ, matching its lowest variable home loan rate at 5.84 per cent in a bid to win new customers,’ she said.
‘This move from Westpac is a sign the refinance market is coming back to life.
Westpac has slashed variable mortgage rates in a sign the Big Four banks are set to battle harder for new borrowers in coming months (pictured are shoppers in Sydney’s Pitt Street Mall)
‘However, the banks are now laser focused on winning over “desirable” borrowers – those with big deposits and who are willing to switch online.’
ANZ’s lowest variable rate, for online only loans, only requires a 20 per cent deposit and offers an offset account, compared with 30 per cent for Westpac’s latest offering with no offset account that reduces interest payments for borrowers with more saved up.
Both are lower than the Commonwealth Bank’s most competitive variable rate of 5.9 per cent, with this online-only product requiring a bigger minimum mortgage deposit of 40 per cent but with an offset account.
‘The rock bottom rates are reserved for new customers with decent sized deposits so they will need to switch lenders or at least haggle if they want to be a winner in the refinance war,’ Ms Tindall said.
NAB’s lowest variable rate of 6.19 per cent – available for online, branch or broker applications – requires a much smaller five per cent deposit but with no offset account.
‘Three of the big four banks are now in a digital arms race, jostling to steal customers from each other but only those customers willing to apply digitally,’ she said.
‘The ball is now firmly in NAB’s court. With a lowest advertised rate of 6.19 per cent it’s looking like a fish out of water.’
Westpac’s managing director of mortgages James Hutton said Australian borrowers were now shopping around for a better deal, especially with cost of living still an issue.
Canstar insights director Sally Tindall said Westpac and ANZ now had the equally lowest variable rate in a sign of intensifying competition
‘With cost of living remaining top of mind for many Australians, savvy refinancers are making the most of the competitive mortgage market and shopping around for a better deal,’ he said.
Smaller players on the Australian mortgage market offer the lowest rates of 5.64 per cent, including Pacific Mortgage Group, People’s Choice, RACQ Bank, The Capricornian and Australian Mutual Bank.
The Bank of China offers a 5.68 per cent rate for refinanciers.
Westpac released a new Home Ownership Report on Tuesday showing a third or 30 per cent of Australian home owners were considering refinancing.
Refinanciers are also less inclined to visit a bank branch, with 82 per cent of the report’s 2,000 respondents saying they want the process to be more digitised.
‘While our online home loan offer is available direct to refinancers online, many customers will still choose to go to a lender or broker for their expertise and face-to-face support,’ Mr Hutton said.
The mortgage war is heating up even though economists and financial markets are expecting the Reserve Bank to leave rates on hold at 4.1 per cent on April 1, following its next two-day meeting.
The next rate cut is more widely expected on May 20, which would follow the release of more comprehensive March quarter inflation data.
It would also be occurring after the next election, which must be held by May 17.
