WBC cuts mortgage rates by 0.20%

By Leith van Onselen

Westpac has just matched NAB’s and CBA’s decisions earlier today to cut mortgage rates by 0.20%, taking Westpac’s standard variable mortgage rate to 6.51%, well above the 6.38%/6.40% offered by NAB and CBA. From Property Observer:

Westpac  will pass on 20 basis points of the RBA’s 25 basis point cash rate cut to borrowers.

It’s standard variable rate will reduce to 6.51% from December 17…

Westpac’s reduction in home loan rates will save homeowners $38 a month or $456 a year in total monthly repayments on an average mortgage of $300,000.

Since October 2011, Westpac has cut its variable mortgage rates by 1.35 percentage points, equating to an annual saving of $3,192 on an average home loan.

The RBA has reduced the cash rate by 175 basis points since October.

This leaves ANZ as the only major that is yet to lower its variable mortgage rates.

Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith is an economist and has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

Comments

  1. I realise that you are quoting from the article, but a reduction of 0.25% actually has an interest rate saving of $750 per annum or $62.50 per month.

    On a P&I loan over 25 years it would reduce the repayments by around $100 per month at the SVR

    I don’t understand why they would get such a simple calculation wrong.

    • They aren’t cutting by 0.25%. They are cutting by 0.2%.

      Nor are they presuming repayments will be maintained at the same level (meaning more of each repayment comes off the principal, eventually reducing total repayments).

      They are simply stating the reduction in the minimum monthly payment.

  2. Mining BoganMEMBER

    The only figure that jumps out at me here is the $300 000 average mortgage.

    In ten years time the country as a whole will look back and wonder what they were thinking.

  3. Why, oh why won’t our banks do what Government demands of them … to lower interest rates in line with the RBA. The answer revealed tonight on 7.30 !

    JOE HOCKEY: … our record illustrates that the banks listen to us when we’re in government. The banks have on more than 55 occasions ignored this government and why wouldn’t they? The rest of Australia ignores this government, so why wouldn’t the banks?

    WBC, ANZ, take note. Prop up those margins and capital base while you can. Bad Boy Joe Hockey is coming, and when he talks – you listen ! Understood ?

  4. I still wonder at the simplicity with which people buy property when interest rates are low – because they are low! If the decision to spend $X changes because of $100 per week interest rate saving, then I’d suggest those same people are headed for a hiding when interest rates reflect economic risk more appropriately. In NZ property prices are pretty much back to where they were in 2007. The difference is, those who bought back then did so into the teeth of variable mortgage rates at 11%. Today’s buyers do so at 4.75%. I know who I think could weather interest rate fluctuations the better!

    • Yes, forgetting all the noise, there is one thing we know and that is that things always always move in cycles. And whilst it not on the horizon now it’s hard to believe the current global monetary policy won’t bring inflation back with some ferocity.