Westpac Group drop fixed home loan rates below 3%

Emma Duffy By on August 22, 2019
 
westpac rate cut

Image by David Gray via Adobe Stock

Australians are now being offered what are some of the lowest fixed mortgage interest rates in history, with Westpac subsidiaries dropping rates below 3%.

Westpac-owned St. George, Bank of Melbourne and BankSA have announced cuts to their fixed rate offerings of up to 135 basis points effective for new home loan applications received from 21 August.

Customers with bigger deposits are being rewarded with the lowest rates, with some rates as low as 2.94% p.a. for terms of up to five years, though the comparison rates do differ.

The biggest cuts were by St. George and Bank of Melbourne who cut their four and five-year fixed-rate loans for new owner-occupiers paying principal and interest by 135 basis points.

Looking for a low variable rate home loan? The table below displays owner-occupier products which may represent the best of the big four banks, best of the top 10 customer-owned banks and the best of the larger non-banks. 

Provider Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
 
Purchase or Refi, P&I 80% Smart Home Loan 2.88% 2.90% $1,660 More details
Low Rate Home Loan w/Offset 2.90% 2.92% $1,665 More details
Base Variable Rate Special P&I 3.20% 3.20% $1,730 More details
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
Purchase or Refi, P&I 80% Smart Home Loan
2.88% 2.90% $1,660
More details
Low Rate Home Loan w/Offset
2.90% 2.92% $1,665
More details
Base Variable Rate Special P&I
3.20% 3.20% $1,730
More details

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 18 November 2019. View disclaimer.

Despite recent sharp cuts to fixed rates, demand for fixed-rate home loans has continued to fall.

According to the latest data from Mortgage Choice, demand for fixed-rate mortgages fell to 14% in July.

Mortgage Choice CEO Susan Mitchell said even though there are good deals, she isn’t surprised amid expectations of further rate cuts to the cash rate from the Reserve Bank of Australia (RBA).

“Despite some very attractive fixed-rate home loan pricing, borrowers across the country are reluctant to fix,” Ms Mitchell said.

“It’s not entirely surprising that borrowers are choosing to keep their options open by opting for variable rate home loans. The reality is, the opportunity to save on repayments if the Reserve Bank cuts the cash rate is too good to pass up.

“In the minutes of the RBA Board’s August meeting released yesterday, members judged it reasonable to expect that an extended period of low-interest rates would be required and suggested that further easing of monetary policy may be on the cards.”

St. George fixed rate cuts

St. George has made a number of big cuts of up to 135 basis points for owner-occupiers.

  • Four-year fixed principal and interest 60% LVR has been cut by 135 basis points to 2.94% p.a. (comparison rate 3.76% p.a.)
  • Five-year fixed principal and interest 60% LVR has been cut by 135 basis points to 2.94% p.a. (comparison rate 3.72% p.a.)
  • One-year fixed principal and interest 60% LVR has been cut by 105 basis points to 2.94% p.a. (comparison rate 3.90% p.a.)
  • Two-year fixed principal and interest 60% LVR has been cut by 15 basis points to 2.94% p.a. (comparison rate 3.85% p.a.)
  • Three-year fixed principal and interest 60% LVR has been cut by 25 basis points to 2.94% p.a. (comparison rate 3.81% p.a.)
  • Four-year fixed principal and interest 60-80% LVR has been cut by 135 basis points to 2.99% p.a. (comparison rate 3.81% p.a.)
  • Five-year fixed principal and interest 60-80% LVR has been cut by 135 basis points to 2.99% p.a. (comparison rate 3.77% p.a.)

Bank of Melbourne fixed rate cuts

Bank of Melbourne is rewarding borrowers with bigger deposits, slashing rates by up to 135 basis points.

  • Four-year fixed principal and interest 60% LVR has been cut by 135 basis points to 2.94% p.a. (comparison rate 3.76% p.a.)
  • Five-year fixed principal and interest 60% LVR has been cut by 135 basis points to 2.94% p.a. (comparison rate 3.72% p.a.)

If fixing for that long isn’t your thing, Bank of Melbourne also offer that interest rate across their one, two and three-year fixed terms, though the comparison rates do differ slightly.

BankSA fixed rate cuts

  • Three-year fixed principal and interest $150k have been cut by 25 basis points to 2.99% p.a. (comparison rate 3.89% p.a.)
  • Two-year fixed principal and interest $150k have been cut by 15 basis points to 2.99% p.a. (comparison rate 3.94% p.a.)
  • Three-year fixed principal and interest has been cut by 25 basis points to 3.14% p.a. (comparison rate 4.64% p.a.)
  • Four-year fixed principal and interest has been cut by 15 basis points to 3.14% p.a. (comparison rate 4.50% p.a.)

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in 2018. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

Some providers’ products may not be available in all states.

In the interests of full disclosure, Savings.com.au and loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure. The interest rate per annum is based on a loan credit of $150,000 and a loan term of 25 years.

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Emma Duffy
Emma Duffy joined Savings.com.au as a Finance Journalist in 2019 after spending a year as the editor of The Real Estate Conversation. She's most passionate about improving the financial literacy of millennials by writing about complex financial topics in a way that's easy for the average Joe (or Jill) to understand.
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