Westpac cuts fixed rate home loans

WESTPAC will drop its fixed interest rates for both new and existing customers by up to 0.3 percentage points from tomorrow.

Westpac cuts fixed rate home loans

WESTPAC will drop its fixed interest rates for both new and existing customers by up to 0.3 percentage points from tomorrow.

Fixed interest home and residential investment loan rates will decline across all terms by between 0.2 percentage and 0.3 percentage points, the bank said.

Its one-year fixed mortgage rate will fall to 8.29 per cent, from 8.59 per cent.

Fixed mortgage rates for three, four and five year terms will be cut by 0.2 percentage points  to 7.99 per cent.

Westpac's move comes one week after Reserve Bank of Australia (RBA) governor Glenn Stevens made comments about the decoupling of mortgage interest rate movements from changes in the official cash rate.

"There isn't any law that says banks can only adjust interest rates when we (the RBA) do,'' Mr Stevens told a House of Representatives Economics Committee hearing last Monday.

Westpac has seen a decline in its short term funding costs measured by the 90 day bank bill rate, enabling the savings to be passed on, a Westpac spokesman said.

"Fixed rate loans are set against the yield curve so as you see declines in short term funding - in the 90 day bank bill rate - you can pass on those savings, which we do. It's something we're continually looking at.''

But overall funding continues to climb as long-term funding can only be renewed at increasingly higher cost, he added.

Westpac has cut interest rates on fixed rate mortgages three times since July. These moves have produced a combined decline of up to 1.3 per cent.

Interest rates for credit cards are still under review, a Westpac spokesman said.

Last Thursday ANZ said it will drop its fixed interest mortgage rates for new customers by up to 0.2 per cent today.