Westpac Bank Increases Home Loan Interest Rates

December 2, 2016

Westpac Bank Increases Home Loan Interest Rates

Australians have been wondering for some time when the rates for home loans would go up again. Many have felt that the rates were as low as they were going to get, and it appears that they may have been right. What was not seen was that the banks would raise their own rates even without the rates officially being raised by the Reserve Bank of Australia.

Update 2.12.16: The Commonwealth Bank has joined the other major banks in raising rates, increasing it’s fixed rate mortgages by up to 0.15%. The fixed rate for a 5 year term is currently 4.74% for owner occupiers.

Banks Have Already Started Raising Their Rates

The move to raise the rates upward was started by the Westpac Group. This large Group includes several other well-known banks, including Bank of Melbourne, ME, St George, BankSA, Ubank and RAMS. Many leaders are speaking out against the move, with some saying that the banks are operating out of greed. Different leaders are being accused of siding with the banks, too.

It seems that the individual taking the biggest share of the blame, however, is the President-elect of The United States – Donald Trump. His announced policies have already affected the markets on a global scale. Businesses and industries are encouraged by his promises of a lot of change and massive construction projects such as the wall between the United States and Mexico.

Westpac’s Interest Hike

Westpac is saying that the new rate increases will not affect any of their current customers. The rates will only affect new borrowers who want money for a home loan.

New borrowers can expect to see a rate hike of 0.6 percentage points on a fixed rate mortgage for five years. This will bring the rate up to 4.59 percent. With this new rate, homeowners will need to pay an additional $158 dollars monthly, if they borrowed $450,000 for 30 years.

Some of the other loans from Westpac remain unchanged, such as the one- and four-year fixed rate loans. Their fixed rate loans for two and four years have increased by 0.3 percentage points, and this applies to owner-occupied homes and investment loans.

Other Banks Expected to Raise Their Rates, Too

After Westpac has taken the lead in raising their rates, it is quite likely that other banks can be expected to raise their rates as well. Some banks already have, following Westpac’s lead. Another bank owned by Westpac, RAMS, has announced that it will increase its fixed rate loans by 0.4 percent. This hike took place on November 28.

UBank has also increased its variable home loan rates by 0.1 percent. This change will take place on December 2, but fixed rate loans will remain the same.

Analysts Predicting a Rise of Up to One Percent

Ripples in the world’s market rates are also already changing in Europe, because of what is expected to occur in the United States. The US 10-year Treasury bond, which serves as a benchmark worldwide, is expected to cause rates everywhere to rise. It already earns more interest due to the expected rise in industry. In Australia, Aussies can expect a rise of about one percent within the next year to a year-and-a-half, says Martin North from Digital Finance Analytics.

Now Is the Best Time to Buy a Home or Refinance

The best rates for buying a home or refinancing will no longer be available soon. With banks already increasing their rates, the time to move to get that great home loan is now. If you wait much longer, the rates may rise even higher, and your opportunity for the home loan you wanted will have passed. Before long, nearly all banks will have raised their rates just because everyone else did.

If you act quickly, you may still be able to get a good rate before that bank decides to raise its rates. You can lock in a rate with most lenders, ensuring that you can still take advantage of the lower rate. If you wait too long, though, it may be many years before rates are ever this low again maybe never.

Written by Refinancing.com.au


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