Westpac offers variable home loan rate under 2 percent

Westpac has become the first big four bank to offer a variable home loan rate under 2 per cent, however the rate is only introductory.

Australia’s second largest lender slashed its basic variable rates by 0.20 per cent for both owner-occupiers and investors paying principal and interest.

This takes Westpac’s lowest variable rate to 1.99 per cent for 2 years, reverting to 2.49 per cent thereafter.

St. George, Bank of Melbourne and BankSA have all dropped their basic variable rates by 0.20 per cent. 

The subsidiaries also cut their 2-year fixed rates by 0.10 per cent.

The group hiked its 4- and 5-year fixed rates by 0.30 per cent.

Analysis of the RateCity.com.au database shows while the majority of recent changes by home loan lenders for fixed rates were hikes, particularly in the longer terms of 3 years and above, it was a different story for variable rates.

In the last two months, 54 lenders have cut at least one variable rate, while just 10 lenders have made hikes to variable rates.

RateCity.com.au research director, Sally Tindall said: Westpac was looking for a bigger slice of the refinancing pie, which hit a record of more than $16 billion in the month of June according to the latest ABS figures.

“Westpac is the first big four bank to offer a variable home loan rate starting with a ‘1’, and while the discount is only for the first two years, it reverts to a rate that’s still lower than its big four bank competitors,” she said.

“The bank was already competing fiercely in most fixed rate categories. Now it’s chasing variable rate customers who want both low rates and flexibility.

“The variable rate cut from Westpac is reserved for new customers, however, that shouldn’t stop existing customers from picking up the phone and asking for a lower rate,” she said.