Westpac to offer new borrowers $2000 refinancing rebate on IO reset

Westpac are seeking to take market share as interest-only loans approach their expiry by offering a $2,000 rebate to new customers refinancing with them.

Westpac and its subsidiaries will offer the $2,000 rebate for anyone refinancing with a loan amount of over $250,000, according to the Australian Financial Review.

The group is also offering a $1,000 purchase rebate for every property bought with a loan amount of over $250,000.

A record $170 billion of IO loans are set to expire over the next two years.

Around 45 percent of the Westpac loan book last year was made up of interest-only loans, followed by Commonwealth Bank, the nation's biggest lender, who had around 40 percent.

According to a recent analysis by investment bank Morgan Stanley, IO lending is expected to fall from around 40 percent of the big four's total loan book at the height of the real estate boom in 2017 to around 20 percent by next year.

This year around 25 percent of major lenders' IO loans, which equates to around $104 billion, is set to expire, the investment bank's analysis showed.