Key points
  • Westpac lifts fixed home loan rates by up to 50 basis points.
  • The changes also apply to subsidiaries Bank of Melbourne, BankSA and St.George.
  • Westpac's big four rivals NAB and ANZ made similar moves this week.

Westpac on Friday increased fixed rates by up to 50 basis points across selected owner occupier and investor home loans, just a day after big four rivals NAB and ANZ nudged higher. 

The changes, effective today, also extend across Westpac subsidiaries Bank of Melbourne, BankSA and St.George. 

Westpac’s current lowest fixed rate is now 6.74% p.a. (6.80% p.a. comparison rate) for owner occupiers with up to 70% loan-to-value ratio (LVR) fixing for a year, following a 30 basis point increase. 

Owner occupiers with 80% LVR get a much higher rate, 6.84% p.a. (6.90% p.a. comparison rate).

Both rates are available with the Premier Advantage Package, Westpac’s package bundle that comes with a 0.20% p.a. discount on fixed home loan rates, and waived fees, among other benefits, for a $395 annual fee.  

See below Westpac’s new fixed home loan rates for owner occupiers paying principal and interest:

Fixed period

LVR

Interest rate

Comparison rate*

1 year

70%-80%

7.04% p.a.

8.76% p.a.

70%-80% (with package)

6.84% p.a.

6.90% p.a.

2 years

70%-80%

7.04% p.a.

8.58% p.a.

70%-80% (with package)

6.84% p.a.

6.93% p.a.

3 years

70%-80%

7.24% p.a.

8.48% p.a.

70%-80% (with package)

7.04% p.a.

7.02% p.a.

4 years

70%-80%

7.39% p.a.

8.40% p.a.

70%-80% (with package)

7.19% p.a.

7.12% p.a.

5 years

70%-80%

7.44% p.a.

8.32% p.a.

70%-80% (with package)

7.24% p.a.

7.20% p.a.

*Comparison rate is based on a $150,000 loan over a 25-year term 

Meanwhile, the lowest rate available for investors paying P&I is now 6.84% p.a. (6.99% p.a. comparison rate), a 30 basis point hike. 

The rate is available to investors with an LVR of up to 70% fixing for one year.

Fixed rate repricing spreads across major banks

The latest fixed home loan rate increases this week reflect a broader repricing trend across major lenders, as funding costs and expectations around the cash rate shift higher. 

Westpac’s move follows similar fixed-rate increases announced by NAB and ANZ this week.  

See also: 

Although it was the fifth-largest bank, Macquarie, that was quicker to the draw, raising fixed rates ahead of the big four. 

These moves were seen as a signal that lenders remain cautious about the longer-term interest rate outlook. 

Fixed mortgage rates are typically adjusted based on expectations for future cash rate movements and forecasts of wholesale funding costs.

As at 18 September, markets are pricing in an 82% chance the cash rate will be increased to 4.60% at this month’s RBA meeting. 

Global bond yields also remain elevated, with Australia's 10-year government bond yield climbing to a 15-year high.

Higher bond yields typically increase banks' wholesale funding costs, putting upward pressure on fixed mortgage rates.

Mortgage demand down

The latest fixed-rate hikes come as Australia’s mortgage market continues to lose momentum.

New data from Equifax shows overall mortgage demand fell 14.1% year-on-year in August, while first home buyer demand plunged 20.1%.

See also: First home buyer demand hits worst level since 2022

Equifax chief solutions officer Kevin James highlighted affordability pressures and uncertainty around interest rates as the forces behind the slowdown. 

"I think people are in a bit of a 'watch and see'. Not only that, they're also in a 'watch and see' to see what's going to happen with the new interest rates," Mr James told the Savings Tip Jar podcast. 

Earlier, the major banks also disclosed home loan demand had been trending downwards. 

Westpac reported a 20% drop in home loan applications since the federal budget, while CommBank, NAB and ANZ have also revealed double-digit declines in mortgage demand.