Westpac cuts fixed-rate mortgages across the board

Another of the major Aussie banks has cut mortgage rates, helping people scraping together repayments or a house deposit.

People scraping together mortgage repayments or a house deposit can take comfort in another of the big four banks cutting mortgage rates.

Westpac announced on Tuesday that, effective immediately, it had lowered its owner-occupied and investment property fixed-rate loan prices.

Getting a fixed rate for one year on the home you will live in has dropped from 6.69 per cent to 6.19 per cent.

Being locked in for five years will have you paying 5.99 per cent on the principal and interest, 0.8 per cent lower than before.

Westpac competitor NAB cut only its three-year, owner-occupied fixed-rate mortgages last month. Picture: NewsWire / David Crosling

Cuts to loans for investment properties are not as substantial, ranging from a 0.45 reduction to 6.34 per cent on a one-year fixed rate and a 0.70 cut for a five-year fixed rate of 6.19 per cent.

Australian Bureau of Statistics data shows the popularity of fixed-rate mortgages peaked in July 2021 when 46 per cent of new and refinanced loans went for a fixed rate.

Throughout 2021, the Reserve Bank was still signalling the cash rate would remain unchanged until 2024.

Westpac chief executive Peter King said mortgage arrears were rising. Picture: NewsWire / Nicki Connolly

Former Reserve Bank of Australia governor Philip Lowe later admitted the central bank’s guidance that interest rates would not rise until at least 2024 was an “embarrassing” error and it “should have done better”.

All those people who snapped up fixed rate mortgages watched the RBA hike rates 10 times in a row from May 2022 and tack on three more hikes in the following eight months as the fixed-term periods of those loans came to an end.

Interest rates now remain at the highest level since November 2011.

However, the Australian share market is pricing in a rate cut before the end of the year, and NAB jumped first last month, cutting its three-year fixed rate on home loans by 0.6 per cent to 5.99 per cent.

Sydney’s CBM Mortgages owner, Craig McDonald, said people looking to alter their mortgage repayments were still holding off on setting a fixed rate.

“We are now seeing another major bank drop their fixed rates which could well mean their economists think we are at the peak of the rate hikes,” Mr McDonald said.

“It could also mean they believe their fixed rate offerings are out of line with the market or they are not expecting anymore cash rate increases.

“The majority of clients are still not seeing this drop attractive enough and are not fixing their rate.

“Most are sitting on their variable rate hoping to see the cash rate drop over the next couple of years.”

While RBA minutes from the August meeting released this week show the central bank is in no rush to slash rates, the US is steaming towards a cut next month.

Across the ditch, the NZ Reserve Bank this month cut its official cash rate for the first time in four years, a backflip on its messaging from just three months prior that rates would hold until mid-2025.

Originally published as Westpac cuts fixed-rate mortgages across the board