Westpac changes rates
10 February 2012
Westpac today announced a 0.10% increase to its standard variable home loan rate to 7.46%.
Westpac Group Executive, Retail and Business Banking, Jason Yetton said: “Increasing interest rates is never an easy decision. However, our move today reflects the increase in costs of banks raising money. While we believe that reducing rates in November and December last year was the right thing to do for our customers and the economy, higher deposit costs and higher wholesale funding costs since then make today’s move necessary.
"Australia benefits from a strong banking system that supports the Australian economy. We need our banks to be strong to protect the interests of all Australians, whether they be depositors, home buyers, retirees, business borrowers, employees or shareholders.”
Over the past four months intense competition for term deposits has increased their cost to us by around 0.30%, while wholesale funding costs have also risen significantly. For example, unsecured five year funding transactions raised overseas by banks to support lending in Australia are currently priced at around 2.30 percentage points over the benchmark bank bill rate. In June last year equivalent raisings were priced at or around 1.50 percentage points over the benchmark.
Mr Yetton added: “It’s the money we raise from customer deposits and from wholesale funding that enables us to keep providing lending support to the economy. As the cost of the money we raise increases, at some point, we have to increase the price of the money we lend.
“We have 5 million depositors and they are benefiting as the interest rates we are offering for both online savings accounts and term deposits are among the most competitive we’ve ever offered and reflect our strong commitment to our Australian customers while lessening our reliance on overseas wholesale funding markets.”
Customers with an average mortgage of $250,000 will see their repayments increase by approximately $16 per month (principal and interest loan).The change in Westpac’s standard variable home loan rate will become effective on 20 February 2012. It follows a 0.50% ($66 per month for a $250,000 mortgage) reduction in the variable home loan rate through cuts in November and December last year.
While there has been significant focus on the standard variable rate for home loans, over 90% of Westpac customers pay far less. Customers on the Premier Advantage Package receive a 0.70% discount, which means they are paying a rate of 6.76%1. They also receive significant savings through discounts on other products including credit cards, home and contents insurance, and Super for Life.
Westpac has a range of mortgage options available to customers including splitting loans between fixed and variable rates as well as a number of competitive fixed rate mortgages. Mr Yetton encouraged customers to discuss their banking arrangements with their local Bank Manager or contact Westpac on 132 558 to ensure they have the right mortgage product to suit their individual requirements.
1On a variable rate home loan of $250 000 or more