Westpac passes on just 18 basis points to bring standard variable rate to 6.71% and cuts fixed rates

Westpac will pass on just 18 basis points to variable mortgage holders following NAB and the Commonwealth Bank announcing earlier today they would pass on 20 basis points.

The reduction, which takes effect on October 15, will cut Westpac's standard variable mortgage rate to 6.71%.

The Commonwealth Bank will offer a standard variable rate of 6.6% from October 12 and NAB a standard variable rate of 6.58% from October 8 – a full week ahead of Westpac.

ANZ will make its decision next Friday and currently offers a standard variable rate of 6.8%.

The reduction in home loan rates will save homeowners $36 a month or $432 a year in total monthlyrepayments on an average mortgage of $300,000.

Since October 2011, Westpac has cut its variable mortgage rates by 1.15%, equating to an annual saving of $2,820 on an average home loan.

Westpac Group executive of retail and business banking Jason Yetton said: “In coming to this decision we have sought to balance the needs of our mortgage customers with those of our millions of savers, particularly retirees who depend on the income from their deposit accounts.

“At the same time we continue to offer package discounts on our headline mortgage rate which will seethe majority of our home loan customers pay no more than 6.01%. And for those borrowers who are looking for security and peace of mind over a longer period we are pleased to make further reductions to our fixed rate homes loans that are now at new three year lows and are very competitively priced.”

Yetton said Westpac’s decision was based on a range of factors including the price of deposits, which remain at very competitive and attractive rates for savers but when combined with the cost of wholesale funding continue to put pressure on bank finances.

"While we have seen some easing in the wholesale market in recent months, our overall costs including the price of deposits remain historically very high,” he added.

Westpac also cut its fixed rate offers for its one year, two year, three year, four year and five year rates.

The new rates include the 0.2% discount offered under the Premium Advantage Package.

They are effective from 10 October 2012.

• One year packaged fixed rate – down 0.20% to 5.49%
• Two year packaged fixed rate – down 0.15% to 5.39%
• Three year packaged fixed rate – down 0.15% to 5.39%
• Four year packaged fixed rate - down 0.20% to 5.69%
• Five year packaged fixed rate - down 0.20% to 5.69%