Westpac hikes new home loan rates by 0.10 per cent

There’s more pain for new homeowners as one of Australia’s biggest banks announces new rate hikes on its home loan repayments.

New Westpac customers hoping to pay off their mortgages under the First Flexi Option can expect to fork out more money as the bank hikes its rates from Thursday.

As one of the big four banks of Australia, Westpac announced on Thursday in an email to brokers it would be increasing its Flexi First Option on April 13.

“An increase to our Flexi First Option interest rates by decreasing the ‘2 year introductory’ and ‘life-of-loan’ discounts for new customers,” the email sited by NCA NewsWire stated.

“Effective today 13 April 2023, we are increasing the following Flexi First Option interest rates by decreasing the ‘2 year introductory’ discount and ‘life-of-loan’ discount by 0.10 per cent p.a. for new customers.”

Those rate increases will include:

• Flexi First Owner Occupier Home Loan (Principal & Interest repayments 2).
• Flexi First Investment Property Loan (Principal & Interest repayments 2).
• Flexi First Investment Property Loan (Interest Only repayments 3).

The latest rate hike comes a week after Westpac chief executive Peter King told a business summit on April 4 next year will result in a spike in the number of customers unable to make their home repayments.

Mr King said this can be largely attributed to the 10 consecutive interest rate hikes over the past 11 months.

“Interest rates are a blunt tool. What we’re looking at in our portfolio is who might need help,” Mr King said.

“The part of the portfolio we’re watching very closely (is) high debt to income — that’s people who borrowed to their maximum debt capacities.”

Westpac CEO Peter King says more rate hikes are expected in the coming months. Picture: NCA NewsWire / Nicki Connolly

The Reserve Bank of Australia has left the cash rate on hold, for the first time in a year after 10 consecutive rises, at 3.6 per cent when it met on April 4.

Over the last ten months, the RBA has continuously lifted rates from a record low 0.1 per cent in May 2022 in a bid to curb skyrocketing inflation.

Inflation rose to 6.8 per cent in 12 months to February, falling from 7.4 per cent annual growth in January and down from the peak of 8.4 per cent in December.

RBA Governor Philip Lowe said there could be further tightening later in the year for many homeowners.

RBA Governor Philip Lowe says the central bank will continue to consider tightening interest rates. Picture: NCA NewsWire / Gary Ramage

“The Board expects that some further tightening of monetary policy may well be needed to ensure that inflation returns to target,” Mr Lowe said.

“The decision to hold interest rates steady this month provides the Board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty.”

New Westpac customers applying for a new home loan applications submitted from April 13 will receive the above new ‘2 year introductory’ and ‘life-of-loan’ promotional discounts.

“For applications submitted before 13 April 2023, the previous ‘2 year introductory’ and ‘life-of-loan’ promotional rates applicable at the date of submission will apply,” Westpac stated on Thursday.

“Existing home loan customers will continue to receive the applicable introductory or promotional discount applied at the start of their loan.”