Westpac hikes fixed home loan rates amid rising funding costs
- Westpac hikes fixed home loan rates for owner occupiers and investors by up to 0.35%.
- Westpac attributes the latest adjustments to increased costs in fixed-rate funding.
- Westpac is the first of the Big Four banks to adjust home loan rates after the RBA hold in November.
Westpac emerged Wednesday morning with up to a 0.35% increase in 1- to 3-year fixed mortgage rates for both owner occupiers and investors.
The move is quite notable as it comes amid a broader market trend of lenders cutting short-term fixed rates in anticipation of rate cuts next year.
However, Westpac, along with all majors' economics teams, already predicted interest rate cuts will be off the table until well into next year.
And while this move came a week and a day after the RBA Board elected to keep the cash rate at 3.60%, Westpac attributed the change to rising funding costs rather than any shift in RBA policy.
"This change reflects the increased cost of fixed-rate funding and ensures our fixed home loan rates remain aligned with current market conditions," Westpac said.
This has brought the bank's top fixed home loan rate to 5.24% p.a. (comparison rate 5.94% p.a.), available through Premier Advantage 70% LVR for residential customers fixing for two years.
This equates to a monthly repayment of $2,758 on a $500,000 principal-and-interest loan over 30 years.
Westpac's Premier Advantage loans feature a 0.20% interest rate discount compared to standard products and additional features for a $395 annual package fee.
The same fixed-rate adjustments apply to Westpac's subsidiary banks, Bank of Melbourne, BankSA, and St.George.
Current Westpac fixed home loan rates for owner occupiers
Product | New rate (change) | Comparison rate* |
Premier Advantage Fixed Options P&1 1yr 70% LVR | 5.24% p.a. (+5 bps) | 5.98% p.a. |
Premier Advantage Fixed Options P&1 2yrs 70% LVR | 5.24% p.a. (+35 bps) | 5.98% p.a. |
Premier Advantage Fixed Options P&1 3yr 70% LVR | 5.39% p.a. (+10 bps) | 5.95% p.a. |
Premier Advantage Fixed Options P&1 1yr 80% LVR | 5.34% p.a. (+5 bps) | 6.08% p.a. |
Premier Advantage Fixed Options P&1 2yrs 80% LVR | 5.34% p.a. (+35 bps) | 6.04% p.a. |
Premier Advantage Fixed Options P&1 3yrs 80% LVR | 5.49% p.a. (+10 bps) | 6.05% p.a. |
Fixed Options P&I 1 yr 80% LVR | 5.54% p.a. (+5 bps) | 7.93% p.a. |
Fixed Options P&I 2 yrs 80% LVR | 5.54% p.a. (+35 bps) | 7.68% p.a. |
Fixed Options P&I 3 yrs 80% LVR | 5.69% p.a. (+10 bps) | 7.50% p.a. |
Westpac likewise increased its investment loans fixed between one and three years by as much as 35 basis points.
The bank's top fixed investor home loan rate is 5.44% p.a. (comparison rate 6.14% p.a.) available for P&I customers with a maximum of 70% LVR, fixed for two years.
Current Westpac fixed home loan rates for investors
Product | New rate (change) | Comparison rate |
Premier Advantage Investment Fixed P&1 1yr 70% LVR | 5.44% p.a. (+5 bps) | 6.18% p.a. |
Premier Advantage Investment Fixed P&1 2yrs 70% LVR | 5.44% p.a. (+35 bps) | 6.14% p.a. |
Premier Advantage Investment Fixed P&1 3yr 70% LVR | 5.59% p.a. (+10 bps) | 6.15% p.a. |
Premier Advantage Investment Fixed P&1 1yr 80% LVR | 5.54% p.a. (+5 bps) | 6.27% p.a. |
Premier Advantage Investment Fixed P&1 2yrs 80% LVR | 5.54% p.a. (+35 bps) | 6.24% p.a. |
Premier Advantage Investment Fixed P&1 3yrs 80% LVR | 5.69% p.a. (+10 bps) | 6.24% p.a. |
Investment Fixed P&I 1 yr 80% LVR | 5.74% p.a. (+5 bps) | 8.43% p.a. |
Investment Fixed P&I 2 yrs 80% LVR | 5.74% p.a. (+35 bps) | 8.15% p.a. |
Investment Fixed P&I 3 yrs 80% LVR | 5.89% p.a. (+10 bps) | 7.93% p.a. |
Even as this latest increase signals possible rate hikes, investor activity is climbing amid favourable market conditions.
The latest lending data from the ABS revealed the number of investor loans reached its highest level since the March quarter 2022 on the back of "falling borrowing costs and low vacancy rates".
A total of 57,624 new investment loans were approved in the September quarter, 13.6% higher than the previous three-month period.
Investors also appeared to be borrowing more, as the average loan size rose by $11,686 to $685,634.
Westpac loan book grows despite softer profits
Westpac recently published its full-year financial results, showing the bank posted a $7.0 billion net profit for the year to September, down 2% from FY2024.
Despite the dip in statutory profit versus the prior year, the bank grew its total lending portfolio by 6% to more than $856 billion, supported by steady demand across both mortgage and business segments.
The bank's mortgage book expanded to roughly $519 billion, with arrears improving to 0.73%, indicating most borrowers remain on top of repayments despite cost-of-living pressures.
Similarly, customer deposits also rose 7% to $723 billion.
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| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.24% p.a. | 6.28% p.a. | $3,075 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
6.04% p.a. | 5.95% p.a. | $3,011 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
6.14% p.a. | 6.16% p.a. | $3,043 | Principal & Interest | Variable | $0 | $350 | 60% |
