Westpac cuts interest rates for businesses and home owners
4 May 2012
- Variable rate business loans reduced by 0.5%
- Headline standard variable mortgage cut by 0.37% to 7.09%
- Most Westpac variable rate customers will move to the new Premier Advantage Package discount rate of 6.39%
Westpac today announced it will reduce interest rates on variable rate loans to businesses by 0.5 percentage points and cut its standard variable mortgage rate by 0.37 percentage points to 7.09 per cent. The new rates are effective from 14 May 2012.
The cuts will help companies, particularly small and medium-size enterprises, drive economic and jobs growth. The 0.5 percentage point reduction in the cost of variable rate business loans comes as Westpac this week launched National Business Month.
Customers on Westpac’s Premier Advantage Package who receive a minimum 0.7 percentage point discount on the headline standard variable mortgage will see their new effective rate fall to 6.39%.
The reduction in home loan rates will save homeowners $900 a year in total monthly repayments on an average mortgage of $300,000. Since October 2011, Westpac has cut its variable mortgage rates by 0.77 percentage points, equating to an annual saving of $1,900 on an average home loan.
Westpac Group Executive Retail and Business Banking Jason Yetton said: “We want to continue to help both our business and mortgages customers, while maintaining attractive high interest rates on deposits.
“We feel it is particularly important to help small businesses at this time. If business is doing well, it follows that we’re all doing well. At the same time, we understand the need to keep mortgage rates as low as possible and continue to reduce rates for homeowners.”
The new standard variable rate is the lowest offered by Westpac since April 2010 and it is the biggest single reduction in more than three years.
Mr Yetton said that while there continues to be a focus on the headline standard variable rates, more than 90 per cent of Westpac home loan customers were paying far less than that amount because of the discounts offered under the Premier Advantage Package.
The discount was this week extended to borrowers with new loans of $150,000 or more who have the Premier Advantage Package. Previously the 0.7 percentage point discount applied only to customers borrowing more than $250,000. Westpac also announced cuts in its one year and three year fixed rate home loans earlier this week.
Mr Yetton said the Reserve Bank’s decision on Tuesday to reduce the cash rate was just one of the factors Westpac had taken into consideration in setting its own interest rates.
“It is now widely acknowledged that the link between the RBA’s cash rate and the actual cost of money to banks – in effect our own borrowing costs – plays an increasingly small role. Other ones, such as the relatively high cost of deposits and wholesale funding, have assumed critical importance,” said Mr Yetton.
“In particular, the price of deposits including term deposits has a major impact on our decision-making. There is intense competition for this form of funding and as a consequence deposit interest rates have changed little over the past six months. This has been great news for savers but it has meant increased pressure on banks when we consider borrowing rates.”
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.