BIG bank Westpac has today announced it is dropping its variable home loan interest rates for customers paying down their debts.
The eight basis point reduction is for owner occupiers who are paying principal and interest on their owner occupier loans.
This will take the standard variable rate down to 5.24 per cent.
But investors have been hit hard: interest-only rates will jump by 34 basis points to 6.3 per cent.
The changes are effective from June 30.
Westpac’s chief executive of the consumer bank, George Frazis, said it was “good news” for owner occupiers and was a move designed to get any owner occupiers paying interest-only to switch to principal and interest and get a better deal.
“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,’’ he said in an issued statement.
He said there would be no switching fee to do so.
Westpac’s subsidiary lenders including St George, Bank of Melbourne and Bank SA have also moved their variable rates across various home loan products.
It comes after ANZ moved its variable home loan interest rates earlier this month, hitting investors on interest-only deals.
The banking regulator, the Australian Prudential and Regulation Authority’s announcement earlier this year limiting new-interest-only lending to 30 per cent of all new residential lending has resulted in banks hiking interest-only deals.
Originally published as Westpac’s double move on rates