Major lender now offers best variable rate for owner-occupiers
Despite the Reserve Bank of Australia’s recent decision to keep the cash rate unchanged, Westpac has lowered its variable home loan rates, making it the most competitive of the Big Four banks for owner-occupiers.
The lender has reduced its Special Online Offer Flexi First Option Home loan rate by 10 basis points, bringing the variable rate for owner-occupiers with a 70% loan-to-value ratio (LVR) to 5.24% (5.25% comparison rate). Investor rates have also been reduced by 20 basis points.
Westpac’s new rates are available for both new home purchases and refinancers. The offer applies to loans starting from $350,000 with an LVR of 80% or less, and is supported by the lender’s virtual banking team.
“This is a significant change,” said Peter Terlato (pictured right), finance expert at financial comparison site Mozo. “It marks a notable increase in competition among the big banks.
“The battle for market share is heating up, with the banks also competing fiercely on fixed rates. With the RBA in a holding pattern, this latest rate cut from Westpac could put pressure on the other majors to follow suit if they want to remain competitive with their headline rates.”
Westpac’s new rate positions it ahead of Commonwealth Bank’s Digi Home loan, which stands at 5.34% for owner-occupiers with a 40% deposit. Data from Canstar indicates that smaller lenders are offering variable rates as low as 4.99% for first-home buyers, while some refinancing customers may access rates from 5.08%.
The latest reduction follows Westpac’s earlier move to cut fixed rates by up to 0.7%, making it the first of the major banks to advertise a fixed rate below 5% this cycle. Its lowest fixed rate is currently 4.89% for a two-year term for owner-occupiers with a 30% deposit.
The RBA maintained the cash rate at 3.60% in late September, following a modest rise in the monthly inflation figure. Although financial markets had widely anticipated the hold, there is now increased uncertainty regarding the likelihood of a further reduction at the November meeting. Previous expectations of another cut have been revised, with both Commonwealth Bank and NAB withdrawing their forecasts for a November move.
A recent economic update from Bendigo Bank described the prospect of a Melbourne Cup Day cut as “a drifting favourite” for those monitoring the odds closely. Attention is now turning to the upcoming quarterly CPI data, due later this month, which will provide further insight into whether the RBA will have sufficient grounds to adjust rates again before year-end.
“This cycle of rate cuts is nearing its end, making it important for homeowners to stay proactive and ready to manage their home loans as interest rates steady,” Terlato said. “Refinancing isn’t only about securing a lower rate, it also means looking at the bigger picture of your finances, including loan fees, repayment flexibility, and the features offered by other lenders.”
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