Westpac announced on Monday it would lift interest rates on fixed-rate, interest-only home loans, as lenders across the board respond to APRA’s attempts to dampen risks in the housing market.
Just three days after Commonwealth Bank of Australia (CBA) announced increases on its fixed loan deals (with interest-only investment loans receiving the biggest hikes), Westpac raised some fixed rates by as much as 0.3 percentage points. These changes will affect customers taking out new interest-only loans.
The biggest increases will be for owner-occupiers who’re borrowing on an interest-only basis; however, property investors will also be affected by the changes. Westpac is increasing rates by 30 basis points across one-, two-, three-, and five-year fixed deals for owner-occupiers on interest-only fixed loans.
Meanwhile, for investors on interest-only deals, fixed rates will rise by 10 basis points across one-, two-, three-, and five-year loan terms.
Investor principal-and-interest deals will remain unchanged for one-, three-, and five-year loan terms. Owner-occupiers with principal-and-interest repayments will also be spared changes on one-, three-, and five-year deals. Two-year fixed-rate loan rates will drop by 0.11% to 3.88%.
“In response to recent regulatory changes, we have both decreased and increased some of our fixed rates for customers who wish to fix their home loan,” a bank spokesperson said. “We are reducing some of our fixed rates by up to 0.31 per cent for customers who make principal and interest repayments, to encourage customers to pay down their home loan in this low interest rate environment.”
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