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7 March 2008

Westpac moves lending and deposit rates

Westpac Banking Corporation today announced new interest rates on its home loan and deposit products.

The interest rate on its variable home loan products will increase 0.30%. Westpac's standard variable rate will be 9.27%, effective Tuesday 11 March 2008.

Interest rates on Westpac Reward Saver, Cash Manager and eSaver deposit accounts will also increase by up to 0.30%, effective Tuesday 11 March 2008.

Westpac Acting Group Executive, Consumer Financial Services, Jeremy Dean said that the decision to raise home loan interest rates by more than the Reserve Bank's cash rate movement of 0.25% had been a difficult one.

"We are extremely mindful of the impact of interest rate increases on our customers. We know that this rise will stretch many family budgets," Mr Dean said.

"However, the cost of wholesale funding continues to rise. The price over the cash rate that Westpac is paying has more than doubled since the US sub-prime crisis unfolded.

"This means the additional 0.05% change still does not recover the full cost increase Westpac has experienced and we continue to absorb a large proportion of the higher wholesale funding costs.

"We will continue to closely monitor the state of global credit markets, and will make further adjustments to interest rates if conditions don't improve."

Mr Dean said Westpac has responsible lending practices to help people avoid financial stress.

"Our rigorous credit assessment processes mean that we also ensure that customers have the ability to manage changes in circumstances, including interest rate movements. Indeed, about 75% of Westpac customers continue to pay more than their minimum monthly mortgage repayment."

However, Mr Dean encouraged any customer who was concerned about their ability to cope with this rate rise to contact the bank.

"There are a number of options available to customers suffering financial stress, including repayment holidays and interest only repayments."