Westpac group lifts 4 and 5-year fixed mortgage rates

author-avatar By
on April 28, 2021
Westpac group lifts 4 and 5-year fixed mortgage rates

Major bank Westpac has become the latest to increase fixed home loan rates, upping the cost of its four and five year fixed loan terms.

Westpac today increased the interest rates on two of its 'Premier Advantage Fixed Options' home loan by 30 basis points, taking the new interest rates on these loans to:

  • 2.29% p.a for the 4-yrs loan (3.38% p.a comparison rate*)
  • 2.59% p.a for the 5-yrs loan (3.43% p.a. comparison rate*)

This applies to principal and interest repayments (P&I) only at this stage, and is available for customers borrowing at least $150,000 at a maximum LVR of 95% (a 5% deposit). 

These changes come after Westpac cut to its 'lowest ever' fixed home loan rates just last month for two-year fixed loans, at an advertised rate of 1.79% p.a (3.37% p.a comparison rate*). 

On a $500,000 loan amount, this 30 basis point increase on the five-year loan would result in an extra $4,000 being paid in interest (bearing in mind fixed rate changes only apply to new customers). 


The table below displays a snapshot of some of the lowest fixed home loan rates from a variety of lenders.

Lender

Fixed
More details
No ongoing feesFree redraw facility
No ongoing feesFree redraw facility

Live-in Fixed Loan (Principal and Interest) 1 Year

    Fixed
    More details
    NO UPFRONT OR ONGOING FEES
    NO UPFRONT OR ONGOING FEES

    Basic Home Loan Fixed (Principal and Interest) (LVR < 70%) 3 Years

      Fixed
      More details

      Fixed Rate Home Loan (Principal and Interest) 3 Years

        Fixed
        More details

        Fixed Options Home Loan (Interest Only) 2 Years (LVR < 70%)

          Fixed
          More details

          Fixed Rate Home Loan (Interest Only) 4 Years (LVR > 80%)

            Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of May 24, 2022. View disclaimer.

            Westpac's subsidiary banks - St. George, Bank of Melbourne, and Bank SA - also made the same home loan rate changes. 

            These banks increased their Advantage Package and Residential Fixed loans by 30 basis points for four and five-year fixed terms. 

            The Advantage Package changes are the same as above, whereas the 'Residential Fixed' changes are the following:

            • Residential Fixed P&I 4 yrs: new rate of 2.44% p.a (4.02% p.a. comparison rate*)
            • Residential Fixed P&I 5 yrs: new rate of 2.74% p.a (4.00% p.a. comparison rate*)

            Compare: Fixed home loan interest rates 

            Fixed rates on the way up again 

            Low-rate fixed loans have been all the rage lately, with Commonwealth Bank even reporting a massive 38% growth in fixed lending in just six months last year. 

            Commbank also lowered the interest rates on some of its shorter fixed-terms (two-years), as did NAB by 15 basis points

            Yet some fixed rates are being increased again, particularly for the longer terms of four and five years. 

            Westpac isn't the only lender to increase fixed home loan interest rates lately, big or small: Commonwealth Bank also moved to increase select four-year fixed rate home loans by up to 20 basis points in March.

            The likes of Bankwest, Newcastle Permanent, and Greater Bank all raised rates on fixed home loan products recently, while Adelaide Bank hiked some of its variable interest rates by up to 15 basis points.

            A major reason why fixed interest rates have been reduced so rapidly in recent months is the Reserve Bank's 'Term Funding Facility' (TFF), a pool of around $200 billion for lenders to use at ultra-low interest rates over three years. 

            As this facility expires in June of 2021, experts have warned that fixed interest rates beyond three-year terms will start to be increased again. 

            These low-rate fixed loans can also catch borrowers unaware with their high revert rates at the end of the fixed term, something Firstmac Chief Financial Officer James Austin said posed a serious risk to borrowers in a few years. 

            "Rates will reset to the banks' SVR (standard variable rate), currently around 4%-4.5%. By the end of three years the cash rate is anticipated to have risen to around 0.50%, taking these SVR to 4.5% ~5.05%," Mr Austin told Savings.com.au.

            "That is a huge jump from the current 1.99% fixed rates on offer. This may well challenge the serviceability of many borrowers.

            Related: Why are home loans rates climbing when the cash rate is still 0.10%?


            Image source: Wikipedia Commons 

            Disclaimers

            The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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            author-avatar
            William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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