Australia’s second-largest lender, Westpac, has announced a reduction of up to 35 basis points on its variable home loan rates, further fueling competition among banks.
New customers can now secure a variable home loan rate of 5.84%, matching the lowest rate currently offered by the big four banks. However, this rate comes with conditions—borrowers must apply online and provide a 30% deposit to be eligible.
Mortgage Lenders Battle for Refinancing Customers
Canstar’s Data Insights Director, Sally Tindall, describes the current market as a “refinance war”, with banks aggressively vying for new customers.
“This is fantastic news for homeowners,” Tindall said.
“However, these rock-bottom rates are mostly reserved for new borrowers with significant deposits. To benefit, existing customers will need to either switch lenders or negotiate better terms.”
Despite the Reserve Bank of Australia (RBA) keeping the cash rate steady at 4.35% for most of 2024, Australian Bureau of Statistics (ABS) data revealed over $206 billion in refinanced loans during the year. However, with the RBA cutting the cash rate to 4.10% in February, Canstar predicts a renewed surge in refinancing.
Big Banks Enter a Digital Rate War
Westpac’s latest move disrupts the market.
“For months, ANZ led the big four banks with the lowest variable rate through its digital-only home loan, closely followed by CBA,” Tindall explained.
“Now, Westpac has leapfrogged CBA, leaving NAB trailing behind.”
With three of the big four banks now competing for customers through digital platforms, homeowners willing to apply online have more options than ever.
Better Rates Available Beyond the Big Four
Despite the big banks’ competitive rates, many smaller lenders still offer more attractive deals.
According to Canstar, over 35 lenders currently provide at least one variable rate below 5.75%, with some even undercutting Westpac’s new offer.
The lowest advertised refinance rate of 5.64% is currently shared by:
- Pacific Mortgage Group
- People’s Choice
- RACQ Bank
- The Capricornian
- Australian Mutual Bank
For borrowers looking to refinance, exploring options beyond the big four could unlock even greater savings.
