New rates bring advertised figures closer to actual offers
Westpac has adjusted its advertised variable home loan rates, reducing them by over one percentage point for new customers, in a move aimed at providing greater transparency on lending rates.
Effective immediately, the bank’s package variable rate for owner-occupiers on principal and interest repayments has dropped from 7.29% to 6.24% per annum. For investors, the rate has been lowered from 7.84% to 6.44% per annum.
The changes apply to loans with a loan-to-value ratio (LVR) between 70% and 80%, under Westpac’s Premier Advantage Package. Identical adjustments are being applied to loans offered under the St.George, Bank of Melbourne, and BankSA Advantage Packages.
“Interest rates are top of mind for Australians at the moment and borrowers are seeking the best deal on their home loan,” said James Hutton, managing director of mortgages at Westpac. “The change we’re making gives buyers a clearer picture of their rate and borrowing power upfront. It also means our advertised rates are now among the lowest of the major banks – providing a competitive proposition for new customers.”
For years, major banks have marketed higher advertised rates while privately offering significant discounts during loan negotiations. This tactic often led to a wide gap between posted and actual rates, used as a marketing strategy to present negotiated rates as special deals.
However, the trend is shifting. Commonwealth Bank revised its approach in late 2022, followed by NAB last year, which also ended its package loan product for new borrowers. Westpac’s move brings it in line with its competitors, while ANZ has phased out its own discounted variable rate product in favour of promoting its ANZ Plus offering.
“Westpac’s changes today aren’t cause for major celebration,” said Sally Tindall, data insights director at Canstar.com.au. “Rather than a significant rate cut, this is a commonsense move by the bank to better reflect the actual rate new customers might receive.”
Tindall added that borrowers should remain focused on the real rate they’re paying, rather than the size of any discount being offered.
“If you’ve got a home loan with Westpac, now is the time to do a reality check on your rate,” she said. “If it’s higher than what the bank is offering new customers, ask them for a reduction.”
Tindall also noted that advertised rates are still open to negotiation, and current customers should compare their rates to those being offered to new borrowers, especially as the average rate for owner-occupiers with a variable loan from a major bank now sits at approximately 6.01%.
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