Westpac increases interest rates on some short-term fixed home loans

Westpac is the second major bank to start increasing shorter-term fixed rate home loans this year, bringing in hikes of 0.10 percentage points for some homeowners.
Westpac increase two three year loans
Westpac has increased some fixed home loan rates. Image: Marlon Trottmann, Shutterstock.com.

Westpac and its subsidiaries St.George, Bank of Melbourne and BankSA have increased two- and three-year fixed home loan rates for owner-occupiers paying principal and interest on Tuesday.

Westpac’s new package two-year fixed rate for borrowers with a 20% deposit is 1.99% (3.48% comparison rate) and its new three-year package fixed rate is 2.08% (3.40% comparison rate). All changes to the other banks’ rates are now live to compare in Canstar’s tables.

Signalling the interest rate cycle may be turning, Westpac is the second major bank to increase shorter-term fixed rates in recent weeks, with Commonwealth Bank having increased its three-year fixed rate last month.

It’s a change of pace from the types of loans lenders have been hiking in recent months, with Canstar data showing March, April and May were dominated by increases to interest rates on longer-term fixed home loans of four or five-year terms.

In fact, Westpac was among the banks that increased longer-term home loan rates in April.

In June, however, we’ve seen some loans with shorter fixed terms of between one and three years starting to move as well.

Two and three year mortgage movements

Comparing Westpac’s shorter-term loan rates to its main rivals, Canstar data shows National Australia Bank is tied with Westpac for the cheapest two- and three-year fixed rates out of the big four banks, at 1.89% (3.97% comparison rate) and 1.98% (3.83% comparison rate) at NAB. Westpac’s two- and three-year package rates are 1.89% (3.38% comparison rate) and 1.98% (3.30% comparison rate) respectively, which are only available to customers with a loan-to-value ratio (LVR) of up to 70%.

For borrowers looking for cheap loans under 2% before interest rates rise, there are still many options available from lenders outside the big four banks.

Canstar data shows there are currently 22 variable loans and 155 fixed loans – including 75 two-year fixed loans and 42 three-year fixed loans – still remaining for owner-occupiers and investors looking for sub-2% borrowing.

Our analysts have wrapped up the lowest fixed rate home loan for each fixed term, and the lowest variable rate currently available, as seen on our database.

Lowest home loan rates on our database by term

  • One-year fixed: 1.67% (comparison rate 3.84%) on bcu’s Residential Fixed P&I 1 yr loan, maximum LVR of 95%
  • Two-year fixed: 1.78% (comparison rate 3.66%) on bcu’s Residential Fixed P&I 2 yrs loan, maximum LVR of 95%
  • Three-year fixed: 1.79% (comparison rate 3.33%) on Credit Union SA’s Fixed Home Loan Package P&I 3 yrs Special Offer loan, maximum LVR of 80%
  • Four-year fixed: 2.04% (2.07% comparison rate) on Hume Bank’s myBlue P&I Fixed 4 yrs loan, maximum LVR of 60%
  • Five-year fixed: 2.24% (2.33% comparison rate) UBank’s UHomeLoan Fixed P&I 5 yrs loan, maximum LVR of 80%
  • Variable: 1.77% (1.86% comparison rate) Reduce Home Loans’ Super Saver Variable loan, maximum LVR of 60%

Source: www.canstar.com.au – 8/06/2021. Based on owner-occupier loans on Canstar’s database, available for a loan amount of $500,000, at any LVR and with principal & interest repayments; excludes first home buyer-only loans. Comparison rate calculated based on a loan amount of $150,000 and loan term of 25 years. Read the Comparison Rate Warning. Top rate in each term selected based on the product with the lowest rate, followed by lowest comparison rate.

Compare Home Loans with Canstar

If you’re currently considering a home loan, the comparison table below displays some of the 1-year fixed rate home loans on our database with links to lenders’ websites that are available for homeowners looking to refinance. This table is sorted by Star Rating (highest to lowest), followed by comparison rate (lowest to highest). Products shown are principal and interest home loans available for a loan amount of $350K in NSW with an LVR of 80% of the property value and that offer an offset account. Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loans comparison selector to view a wider range of home loan products. Canstar may earn a fee for referrals.

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