Westpac Raises Home Loan Rates: What It Means for Homebuyers
Westpac raises home loan rates for its two- and three-year fixed home loans. Just over a month ago, the bank also raised its rates on its four and five-year home loan products.
Westpac raised the interest rate for its two-year home loan from 1.79% to 1.89%. The interest rate for its three-year home loan also increased from 1.88% to 1.98%.
The subsidiaries of Westpac, namely Bank of Melbourne, St. George Bank, and Bank SA, will also update their home loan rates. Other banks that have also increased their rates were Citi, NAB, UBank, and CommBank.
Borrowers of Westpac can expect an increase at the start of the new term funding period at the end of June. Despite the increase in interest rates, Westpac’s rates are still below the 2% threshold for ultra-low rates. ANZ is the only bank to go beyond the threshold, and they are offering 2.04% for their owner-occupier two- and three-year fixed home loan products.
Westpac’s Home Loan Products
The interest rate of 1.89% is applicable for Westpac’s two-year standard fixed rate less package discount, with an LVR of up to 70%. For LVR above 70%, an interest rate of 1.99% applies, with a comparison rate of 3.48% per annum.
The interest rate of 1.98% is applicable for Westpac’s three-year standard fixed rate less package discount, for LVR of up to 70%. An interest rate of 2.08% applies for LVR of more than 70%.
Here are other home loan packages available from Westpac, with their corresponding rates.
- One-year Standard Fixed Rate Less Package Discount (up to 70% LVR)
Interest Rate: 1.99% p.a.
Comparison Rate: 3.50% p.a.
- One-year Standard Fixed Rate Less Package Discount (above 70% LVR)
Interest Rate: 2.09% p.a.
Comparison Rate: 3.59% p.a.
- Four-year Standard Fixed Rate Less Package Discount (up to 70% LVR)
Interest Rate: 2.19% p.a.
Comparison Rate: 3.28% p.a.
- Four-year Standard Fixed Rate Less Package Discount (above 70% LVR)
Interest Rate: 2.29% p.a.
Comparison Rate: 3.38% p.a.
- Five-year Standard Fixed Rate Less Package Discount (up to 70% LVR)
Interest Rate: 2.49% p.a.
Comparison Rate: 3.33% p.a.
- Five-year Standard Fixed Rate Less Package Discount (above 70% LVR)
Interest Rate: 2.59% p.a.
Comparison Rate: 3.43% p.a.
What Caused the Increase in Interest Rates?
The unrest in the bank’s interest rates has been brewing as early as March 2021. Banks were scrambling to turn the low price of money to their advantage. Lenders offered crazy low rates for mortgages as a result of the COVID-19 pandemic.
The low mortgage rates, as expected, resulted in the boom of the real estate industry. As the number of home buyers increased, the prices of the properties also skyrocketed, not just in the cities but in the regional areas as well.
The low cash rate of the Reserve Bank of Australia also contributed to the changes in interest rates. However, the RBA states that these low rates will most likely remain until 2024, not until wage growth has satisfactorily increased and the number of unemployment has lessened.
What Does This Mean for Home Buyers?
This increase in home loan rates may spell the end of record-low mortgage rates for Australians. But this does not mean that borrowers will no longer find good home loan deals. Australian homebuyers can still take advantage of fixed low rates to achieve the home of their dreams.
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