One of Australia’s leading banks, Westpac, has surprised many by announcing a cut in its mortgage rate for Australians taking out one of its Flexi First variable home loans.
According to reports, the bank has launched a discount of 0.15% per annum for the first two years, which is the introductory period. After this, there is a promotional rate for the life of the loan.
The bank’s interest rate changes will affect many mortgage customers, including people with a Flexi First Owner Occupied Home Loan or a Flexi First Investment Loan. They will see both principal and interest payments affected. In addition, Flexi First Investment Loan customers will see their interest-only payments affected.
Lenders offering new products to attract customers
Westpac announced that the changes would affect new applications from August 18th onward. Some officials have said that there is a growing trend of banks introducing new and appealing offerings to bring new customers on board.
Craig McDonald, the owner of CBM Mortgages, said: “We are seeing many lenders introducing new products as well as re-evaluating their variable rate loans. They are trying to pick up new clients and they will know some clients will have fixed rates expiring soon. With the large gap between current fixed rates and variable, clients are shopping around for a competitive variable rate rather than going fixed.”
While the Reserve Bank of Australia has implemented a series of rate hikes, Westpac bucked the trend earlier this month by cutting the interest rate on four-year owner-occupied home loans. The bank reduced the fixed interest rate by 1%, taking it down to 4.99%.
At the start of August, Westpac revealed its interest rate changes in response to the base rate hike after two other banks, Commonwealth Bank and ANZ, did so. The rate increases from the bank came into effect on August 12th for both existing and new customers.
A lifeline for mortgage customers
The reduction in interest rates announced by the bank will be a lifeline to many affected by the cut.
Many people are already struggling with the soaring cost of living, and the spate of interest rate increases from the central bank has taken its toll on many households. Many are already finding it hard to keep on top of essential costs such as food and energy, and the base rate hikes have put them under even more financial pressure.