Westpac slashes personal loan rates by 2%

author-avatar By on March 23, 2021
Westpac slashes personal loan rates by 2%

Major bank Westpac has taken a break from cutting home loan rates, instead taking the axe to one of its key personal loan products.

After cutting to its 'lowest ever' home loan interest rate of 1.79% p.a (3.37% p.a comparison rate*) earlier in March, Westpac has reduced its unsecured personal loan interest rate by 200 basis points today. 

The unsecured personal loan now has an interest rate of 9.99% p.a (comparison rate 11.16% p.a.*) fixed for 1-7 years, down from 11.99% p.a. 

The table below features personal loans with some of the lowest interest rates on the market.

Lender
Advertised rate Comparison rate Monthly repayment Interest TypeSecured TypeEarly Withdrawal FeeOngoing FeeApplication FeeTotal RepaymentEarly RepaymentInstant ApprovalOnline Application
FixedUnsecuredN/AN/AMore details
NO ESTABLISHMENT, ACCOUNT OR EARLY REPAYMENT FEES

No Fee Personal Loan

  • No security required
  • Can apply online
  • Fast time to funding
NO ESTABLISHMENT, ACCOUNT OR EARLY REPAYMENT FEES

No Fee Personal Loan

  • No security required
  • Can apply online
  • Fast time to funding
FixedUnsecuredN/AN/AMore details
FAST APPROVAL TIME

Unsecured Personal Loan (Excellent Credit) (Amount > $5000)

  • No ongoing fees
  • Flexible repayment options
  • No security required
FAST APPROVAL TIME

Unsecured Personal Loan (Excellent Credit) (Amount > $5000)

  • No ongoing fees
  • Flexible repayment options
  • No security required
FixedUnsecuredN/AMore details
CHECK YOUR RATE IN 2 MINUTES
  • No ongoing fees
  • No application fees
  • Apply online
CHECK YOUR RATE IN 2 MINUTES
FixedUnsecuredN/AMore details

Liberty Personal Loan (Very Good Credit History)

Rates based on a loan of $30,000 for a five-year loan term. *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 October 23, 2021. View disclaimer.

This is now the equal-lowest personal loan rate offered by the big four, tied with NAB, although NAB's comparison rate is lower (10.88% p.a*). 

It's also lower than the average unsecured personal loan interest rate, which is around 12% p.a based on Savings.com.au's research.

In terms of fees, Westpac's Unsecured Loan charges a $175 early repayment fee for customers paying off the loan before the end of the fixed term.

This is above the market average of about $100, and most other big bank personal loans don't charge one (although ANZ charges $300 for one loan). 

It also charges an upfront fee of $250 and a monthly service fee of $12, as well as a missed payment fee of $15. 

See how these compare to other personal loan fees here

Other key personal loan rate changes 

Although not as common as home loan rate changes, a few major lenders have cut personal loan rates as well. 

The last major bank to do so before Westpac was ANZ in September last year, when it cut rates by a substantial 300 basis points. 

Two other lenders lowered term deposit rates today: Greater Bank and SocietyOne.

Greater Bank decreased the interest rates on its New Car Loan and Secured Personal Loan by up to 51 basis points.

Greater Bank's Secured Loan now has an available interest rate of 5.99% p.a (6.37% p.a comparison rate*). 

SocietyOne meanwhile dropped the interest rate on its Unsecured Loan for 'Excellent Credit' customers by 60 basis points, to a new interest rate of 6.39% p.a (6.39% p.a comparison rate*). 

Related: How personal loans influence your credit score

SocietyOne is a relatively new fintech lender, and surpassed $1 billion in lending last month when it also launched its first secured loan product. 

Usually the more common type of personal loan, a secured personal loan is a type of personal loan that uses an asset as collateral on the loan. 

For example, car loans are often secured as they use the car as security in case the borrower can't meet their repayments. 

Because they're generally less risky, these loans tend to come with better rates and fees compared to unsecured loans. 

According to SocietyOne, this is what customers can get, accessing a larger loan amount up to $70,000, loan terms up to seven years, and a cheaper rate. 

“We’re hitting the ground running in 2021 and building on our strong growth momentum by diversifying our product offering through a range of new product launches and improvements to the customer experience,” said CEO Mark Jones.

“With the launch of a secured loan product, we’re able to increase accessibility and flexibility for our customers, while maintaining our high credit quality for our investors.

“Eligible borrowers will now be able to access an increased loan amount and longer term, while receiving a 1% discount compared to our unsecured loans by pledging security such as a used car."

Other personal loan rate cuts in recent weeks include WISR (up to 70 basis points) and OurMoneyMarket (down up to 46 basis points). 

Why the recent changes? 

It's possible more personal loan rate changes have been happening lately due to increased demand for personal credit. 

Equifax’s Quarterly Consumer Credit Demand Index for the September 2020 quarter showed personal loan applications were down more than 32% nationwide. 

Every form of credit suffered similar falls except for home loans, but there was an improvement by the next quarter, which showed the decline fell to 28.1%. 

Kevin James, General Manager Advisory and Solutions at Equifax, said government stimulus measures like JobKeeper and boosted JobSeeker reduced the need for Australians to rely on credit. 

But this should be set to change once these measures expire next week. 

"As government stimulus starts to pull back, we anticipate personal loans may experience a revival, particularly among sub-prime borrowers who may not be eligible for other kinds of financing," he said. 


Photo by Luke White on Unsplash

 

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 November 2019. They are (in descending order): Great Southern Bank, 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 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

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

In the interests of full disclosure, Savings.com.au, Performance Drive 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.

*The Comparison rate is based on a $30,000 loan over 5 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.

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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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