Banks in rate war

Win for owner-occupiers

AN AUSTRALIAN home loan war is well and truly on after banking giant Westpac was the second of the big four to move its home loan rates this month.

Just 11 days after ANZ moved its rate deals, the mortgage industry has been waiting for the other big banks to drop their rates and Westpac did exactly that.

Financial comparison website Mozo’s spokeswoman Kirsty Lamont said “the gloves are off” following yesterday’s announcement and said more rate moves would follow.

While Westpac delivered good news for owner occupiers paying down their debts, it was bad news for investors opting for interest-only repayments.

Westpac dropped variable interest rates for owner occupiers paying principal and interest by eight basis points, bringing down the standard variable rate to 5.24 per cent, saving borrowers on a stan- dard $300,000 30-year loan $15 per month.

This is the second lowest standard variable rate for this type of loan among the big four behind ANZ.

But investors are again getting slammed for only paying interest — Westpac’s standard variable rate will climb by 34 basis points to 6.3 per cent and will be the highest of the big four.

These changes start on June 30.

Ms Lamont said borrowers should expect more movements in the fiercely-competitive mortgage market in the weeks to come.

“APRA’s crackdown on riskier lending has spurred an all-out mortgage rate war between lenders and interestonly borrowers are the biggest casualties,’’ she said.

Mortgage Choice chief executive John Flavell said banks were hungry for owneroccupier, principal and interest business and were willing to slash their rates in order to attract that type of customer.