Westpac joins smaller banks in cutting rates for IO property loans

Staff reporterDecember 4, 20170 min read

Westpac is cutting fixed interest rates on new interest-only loans by up to 0.4 percentage points.

Interest-only loans for owner-occupiers are being cut by 0.15 percentage points for two and three-year terms, to 4.09% and 4.19%, respectively.

Westpac said the lower rates would be available only to new customers, in a sign the lender is looking to grab market share from rivals.

It comes after several SMALLER banks have cut their fixed interest lending rates in recent weeks, with the Mozo comparison website, signalling lenders including Bankwest, CUA, Heritage Bank, ME Bank and Teachers Mutual Bank all reduced some fixed interest rates over the past month.

Westpac-owned brands are joining smaller rivals by cutting fixed rates across two and three-year terms, for both owner-occupiers and property investors.

Westpac-owned St George, Bank of Melbourne and BankSA have cut rates on two-year fixed loans for investors paying only interest by 0.4 percentage points, to 4.09%.

Fairfax Media recently noted fixed interest rates are set off bond rates, and tend to move in response to expectations about the future direction of the cash rate. 

A note to mortgage brokers said the deepest cuts would be for interest-only loans, where the Australian Prudential Regulation Authority had forced banks to clamp down earlier this year because of "heightened risks" in the housing market.

Staff reporter

Interest-only Loans
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