Home loans under 5%: Westpac joins fixed rate war

The big four bank leapt ahead to lead the fixed rate race, slashing up to 70 basis points from advertised rates on select mortgage products. 

Those looking to buy property or refinance their home loan could now be facing rates as low as 4.89% p.a. (5.88% p.a. comparison rate*) if they fix their rate for a two-year term.

That's compared to the lowest variable rate in Westpac's stable – 5.34% p.a. (5.35% p.a. comparison rate*), offered to certain direct-to-bank home loan refinancers.

The 45 basis point difference between Westpac's most competitive fixed rate and its lowest variable rate would equal savings of nearly $140 a month on a $500,000 mortgage.

How much could a lower rate save you? Use our Mortgage Repayment Calculator to find out

Falling fixed rates can also be a positive sign for home loan holders more broadly.

Banks and lenders usually set fixed rates based on expectations for future cash rate movements.

Lower fixed rates might be an indicator that market participants expect the Reserve Bank of Australia (RBA) to announce more cuts in the coming months and years.

Westpac was the last big bank to pass on the RBA's August rate cut, dropping variable rates for new and existing home loan borrowers on Tuesday.

That was one day after NAB, four days after CommBank and ANZ, and 11 days later than Macquarie Bank.

Joining it in cutting fixed rates on Friday were Westpac subsidiaries St George, Bank of Melbourne, and BankSA.

Here's the lowdown on Westpac's latest home loan rate cut:

Westpac fixed rates from 4.89% for owner-occupiers

The lowest fixed rates in Westpac's line-up are offered to those borrowing at least $150,000 and signing up to its Premier Package.

The package offers a 20 basis point rate discount at the cost of a $395 annual fee.

Owner-occupiers who can slap a deposit or equity worth at least 30% of their property's value might also find themselves with an additional 10 basis point discount.

Here are Westpac's new fixed rates for owner-occupiers making principal and interest (P&I) repayments:

Fixed period	LVR	Change	New rate	Comp rate*
One year	≤70%	-50bp	5.19%	5.97%
	70-80%	-50bp	5.29%	6.07%
	>80%	-50bp	5.59%	6.37%
Two years	≤70%	-70bp	4.89%	5.88%
	70-80%	-70bp	4.99%	5.97%
	>80%	-70bp	5.29%	6.27%
Three years	≤70%	-60bp	5.29%	5.92%
	70-80%	-60bp	5.39%	6.02%
	>80%	-60bp	5.69%	6.31%
Four years	≤70%	-30bp	5.59%	6.00%
	70-80%	-30bp	5.69%	6.10%
	>80%	-30bp	5.99%	6.39%
Five years	≤70%	-30bp	5.59%	6.00%
	70-80%	-30bp	5.69%	6.10%
	>80%	-30bp	5.99%	6.39%

Westpac's new lowest mortgage rate puts it among the market's most competitive lenders for fixed rate home loans.

Indeed, at 4.89% p.a., its two-year fixed rate is just 20 basis points higher than the lowest in Your Mortgage's database for everyday owner-occupiers: 4.69% p.a. (5.26% p.a. comparison rate*) from Easy Street Financial Services.

Trailing slightly is Macquarie, which advertises a two-year fixed rate of 4.99% p.a. (5.57% p.a. comparison rate*) for owner-occupiers, while NAB offers a 5.29% p.a. (6.14% p.a. comparison rate*) two-year fixed rate.

Westpac unveils investor home loan rates from 5.09% p.a.

Meanwhile, property investors could now realise fixed rates as low as 5.09% p.a. (6.07% p.a. comparison rate*) when making P&I repayments or 5.29% p.a. (6.10% p.a. comparison rate*) when making interest only (IO) repayments:

Fixed period	LVR	Interest type	Change	New rate	Comp rate*
One year	≤70%	P&I	-50bp	5.39%	6.17%
		IO	-60bp	5.49%	6.17%
	70-80%	P&I	-50bp	5.49%	6.27%
		IO	-60bp	5.59%	6.27%
	>80%	P&I	-50bp	5.79%	6.56%
		IO	-60bp	5.89%	6.57%
Two years	≤70%	P&I	-70bp	5.09%	6.07%
		IO	-70bp	5.29%	6.10%
	70-80%	P&I	-70bp	5.19%	6.17%
		IO	-70bp	5.39%	6.20%
	>80%	P&I	-70bp	5.49%	6.46%
		IO	-70bp	5.69%	6.49%
Three years	≤70%	P&I	-60bp	5.49%	6.12%
		IO	-60bp	5.59%	6.13%
	70-80%	P&I	-60bp	5.59%	6.22%
		IO	-60bp	5.69%	6.23%
	>80%	P&I	-60bp	5.89%	6.51%
		IO	-60bp	5.99%	6.52%
Four years	≤70%	P&I	-30bp	5.79%	6.20%
		IO	-30bp	5.89%	6.21%
	70-80%	P&I	-30bp	5.89%	6.30%
		IO	-30bp	5.99%	6.31%
	>80%	P&I	-30bp	6.19%	6.59%
		IO	-30bp	6.29%	6.61%
Five years	≤70%	P&I	-30bp	5.79%	6.19%
		IO	-30bp	5.89%	6.21%
	70-80%	P&I	-30bp	5.89%	6.29%
		IO	-30bp	5.99%	6.31%
	>80%	P&I	-30bp	6.19%	6.59%
		IO	-30bp	6.29%	6.60%

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