Westpac has revamped its first home buyer offering by introducing new owner-occupied products and removing some of their fixed rate investment loans.
Effective from now, the major bank is introducing the following loans for owner-occupier first home buyers (FHBs) who are paying principal and interest:
- Five-year Introductory Flexi First Option Home Loan, with an interest rate of 3.88% (3.95% comparison rate).
- Five-year Fixed Option Home Loan with its Premier Advantage Package, with an interest rate of 3.49% (4.63% comparison rate).
In a bid to simplify its FHB mortgage offering, Westpac has also removed the following products:
- Five-year Introductory Rate Flexi First Option Home and Investment Property Loan
- Three-year Fixed Option Home Loan and Investment Property Loan
The changes come after the Reserve Bank’s decision to cut interest rates to a historic low of 1.25%. The rate cut is expected to boost home loan demand from FHBs.
Westpac was the last of the big four banks to announce rate changes following the RBA’s announcement. Like ANZ, Westpac did not pass on the full 25 basis point rate cut, instead cutting by only 20 basis points.
In Westpac’s interest rate cut announcement on 4 June, Westpac Chief Executive, Consumer, David Lindberg said the current historically low-interest rate environment creates an opportunity for home-owners to get ahead on their repayments.
“It is also a good time to for first home buyers to get onto the property ladder with some of the lowest rates in the history of the Australian mortgage market available,” Mr Lindberg said.
Consumers cautious after RBA rate cut: Westpac, Roy Morgan
The RBA rate cut was not enough to keep consumer sentiment from tumbling, according to the most recent Westpac-Melbourne Institute survey.
The consumer sentiment index dipped 0.6% to 100.7 in June, from 101.3 in May.
Westpac Senior Economist Matthew Hassan said it was a disappointing result given the cut in official interest rates.
“It suggests deepening concerns about the economy have outweighed the initial boost from lower interest rates,” Mr Hassan said.
“Responses over the survey week show a marked drop-off after the Reserve Bank’s official rate cut. The initial sentiment reaction to the June rate cut will be somewhat disappointing for the Bank.”
The biggest decline in the index was the expectations of the economy in the next 12 months, which dropped 4.7%.
In contrast, expectations for personal finances in the next 12 months rose 3.1%.
“That was despite the ‘finances vs a year ago’ sub-index weakening 2.4%, the mix implying that household finances remain under pressure but are expected to improve as lower interest rates and income tax relief comes through,” Mr Hassan said.
The ANZ-Roy Morgan consumer confidence survey, also released on Wednesday, similarly noted a decline in sentiment and a slump in the current economic conditions metric.
ANZ economist David Plank said weak Q1 GDP and the “soft retail figure for April have seen consumer confidence move lower over the past week, despite the rate cut from the RBA”.
“Looking back to the rate cuts in 2015 and 2016, there was no tendency for confidence to rise immediately following the move lower in rates. So it’s not particularly surprising that there has been no immediate boost from the rate cut.
“Inflation expectations readings below 4% seem to have become the norm in the past couple of month, which is unique in the history of this survey and something the RBA will be taking note of,” Mr Plank said.