Westpac encourages the switch as its lifts interest only home loan rates

Westpac has increased interest only rates for variable home loans for owner occupiers and investors.

Owner occupied interest only rate will increase by 34 basis points to 5.83 percent p.a.

Investor interest only rate will increase by 34 basis points to 6.30 percent p.a.

Westpac have also announced an eight basis points reduction in variable interest rates for customers paying principal and interest on their owner occupier home loans.

It takes the standard variable rate for these owner occupiers to 5.24 percent p.a.

These rate changes are all effective from 30 June 2017.

George Frazis, chief executive of Westpac Consumer Bank, said owner occupier customers who make principal and interest repayments as they will benefit from lower interest rates allowing them to pay off their loans faster.

“We hope the rate reduction will encourage owner occupier customers with interest only home loans to switch to principal and interest repayments, helping them to pay down their home loan in this low interest rate environment. There will be no switching fee. 

“We understand the significance of interest rate changes to our home loan customers, so we try to balance the needs of both owner occupiers and investors in making these decisions.

“APRA’s limit on new interest only lending is 30% of new residential mortgage lending, so we have to continue to make changes to our interest only rates and lending policies to meet this benchmark,” said Mr Frazis.

“Today’s decision is not in response to the Federal Government’s recently announced bank levy,” Mr Frazis told Broker News.