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Stock MarketWestpac has introduced a competitive home loan rate of 5.84% per annum in a move to ignite a refinancing rate battle. This offer targets new customers with a 30% equity stake in their properties. The bank’s “Special Online Refinance Offer” marks a 35 basis point reduction from its previous lowest rate. This rate matches ANZ Plus’s lowest big bank refinance rate.
The rate of 5.84% per annum is available for owner-occupiers with a loan-to-value ratio (LVR) of up to 70%. Westpac’s Flexi First Option special rate applies to direct-to-bank, online refinancers who make principal and interest repayments. Investors can access a rate of 6.09% per annum under similar conditions, including an LVR below 70%.
Notably, refinanced loans must originate from external sources outside the Westpac group, which includes St George, Bank of Melbourne, BankSA, and RAMS. The move by Westpac signals the onset of a potential refinancing war following the Reserve Bank’s decision to lower the cash rate in February. Further rate cuts are anticipated throughout 2025.
This competitive rate offering by Westpac and ANZ surpasses CommBank’s lowest refinance rate of 5.90% per annum. CommBank’s Digi Home Loan offers this rate to digital-only refinancing owner-occupiers with an LVR of 60% or less. The rate increases to 5.94% per annum for LVRs between 70.01-80%.
NAB, another major player, is potentially gearing up with its featured offer rate of 6.19% per annum for owner-occupiers making principal and interest repayments. Meanwhile, NAB’s digital subsidiary, UBank, matches Westpac and ANZ’s digital-only refinance rate at 5.84% per annum for LVRs up to 60%.
The Australian Bureau of Statistics has not yet released data for the March quarter, but there has been a noticeable surge in external refinancing activities. Westpac’s recent Home Ownership report indicates a 45% increase in home loan refinancing with the bank over the past quarter. The report also reveals that almost a third of homeowners are contemplating refinancing, with a strong preference for a digitized and streamlined process.
The refinancing landscape has evolved significantly, especially since serviceability buffers were reduced for eligible refinances nearly two years ago. This has led to a substantial increase in serviceability exceptions and waivers, with banks adopting more flexible criteria to facilitate refinancing. APRA data shows a significant rise in serviceability exceptions and waivers, indicating a more lenient approach by banks towards refinancing applicants.
In conclusion, Westpac’s aggressive move to introduce a competitive home loan rate is likely to trigger a new wave of refinancing activity in the market. This development underscores the evolving dynamics of the mortgage industry and the increasing focus on customer acquisition and retention in the highly competitive banking sector.
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