Westpac will increase its variable home loan for owner occupiers and its residential investment property home loan rates.
The increase will be by 20 basis points and will be effective from 20 November 2015.
This change coincides with Westpac’s other announcement that it was raising an additional $3.5 billion in ordinary equity in accordance with new regulatory requirements that will increase the cost of providing mortgages.
The specifics of the changes are as follows.
- Headline owner occupier home loan variable rates will increase by 20 basis points per annum to 5.68% per annum (comparison rate 5.82% per annum). Other variable rate products such as the Equity Access loans will also increase by 20 basis points per annum.
- Headline residential investment property variable rates will increase by 20 basis points per annum to 5.95% per annum (comparison rate 6.09% per annum).
- Most of the Westpac variable home loan customers who receive a Premier Advantage Package discount of 0.70% per annum will be moved to a discounted package rate of 4.98% per annum for the owner occupied home loan (comparison rate 5.35% per annum). Those with residential investment property loans move to 5.25% per annum (comparison rate 5.62% per annum).
- Fixed rate loans will not get any changes. The current Premier Advantage Package 2-year fixed rate for owner occupiers stays at 4.29% per annum (comparison rate 5.06% per annum). Fixed rate residential investment property loans also remain at 4.56% per annum (comparison rate 5.33%).
- Depositors will enjoy a 25 basis point increase on selected new term deposits. This comes into effect on 16 October 2015.
(Comparison rates are based on a secured variable rate loan worth $150,000 over a 25-year term)
George Frazis, the chief executive of Consumer Bank, noted that due to the regulatory changes the amount of capital that needs to be held against mortgages will increase by more than 50%.
"As we have always said publicly, while Westpac is well placed to meet these changes, a significant increase in capital ultimately increases the cost of providing home loans to customers,” he said.
"This is a difficult decision and one that is not taken lightly. We acknowledge that it does impact customers, even in an environment where interest rates remain near historic lows. We have sought to carefully balance the needs of our borrowers, depositors and our shareholders, as well as the competitive market we operate in. Increases in the cost of doing business inevitably influence business decisions, including price.”
Frazis additionally stated that he is encouraging all customers who are concerned about the changes to approach the Consumer Bank for guidance and more information.
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