Changes are happening - please bear with us while we update our site.

Changes are happening - please bear with us while we update our site. Click here to give us your advice and feedback.

Is Westpac Banking Corp About To Cut Interest Rates For Mortgages?

Westpac Banking Corp (ASX: WBC) is offering a discounted interest rate for first time property buyers.

According to yourmortgage.com.au, Westpac Banking Corp (ASX: WBC) has cut its investor loans by up to 1.05% in response to increasing competition amongst the major banks and regional lenders.

Westpac Banking Corp is Australia’s second-largest bank, behind Commonwealth Bank of Australia (ASX: CBA), and owns brands like RAMS, Bank of Melbourne and St. George Bank.

Interest Rates Are… Rising… or Falling?

It was only a few weeks ago that many market commentators were saying that mortgage interest rates were likely to rise due to foreign interest rates going up, like in the USA.

Many people believe that declining interest rates since the 1980s has been one of the main factors boosting house prices over the last few decades, particularly the last 10 years. That’s why Labor have been keen to take the wind out of property price growth by potentially reducing the effectiveness of negative gearing.

Various other plans have been considered such as introducing an ’empty house’ penalty on foreign buyers who don’t use their property. The Australian Prudential Regulation Authority (APRA) imposed a 10% growth cap on investor loans a while ago. Banks increased the interest rate for investors on interest-only loans.

Winding Back The Investor Loan Changes

Some of the tactics appear to have work. Investors have significantly withdrawn from the market, so now banks and the regulator are hoping to undo some of the investor withdrawal. The head of APRA, Wayne Byres, is considering lifting the cap on investor loans.

“We think the quality of lending the banking system is doing today is certainly higher and better than it was a few years ago”, Mr Byres said in a Senate economics legislation committee in Canberra.

Speaking of the cap on lending, he said, “…it was put in place because we were particularly uncomfortable with the lending standards in which many of those loans were being granted, and as those lending standards have been improved, you can start to think about substituting.”

Westpac reported that in the September 2017 quarter investor lending grew by 6% and interest-only facilities represented 26% of new mortgage lending compared to 50% in the first half of 2017.

However, it has been reported that Westpac is now going to offer investor discounts of up to 1.05%. This interest rate discount is to entice ‘rentvestors’. That is, those who rent where they want to live and buy in the outer suburbs of a city.

First-time buyers are now coming back to the market with property prices slightly declining across Australia’s capital cities. Earlier this month, Business Insider referred to CoreLogic data that showed house prices may be stabilising across Australia, except in Sydney.

Takeaway

Official interest rates in Australia appear to be at a standstill, the RBA’s rates currently sit at a 30-year low of 1.5%. However, banks like Westpac are on a mission to remain competitive in what may appear to be a slowing housing market.

Whatever happens next, for now at least, first-time property buyers will be cheering on Westpac’s lower interest rates.

Join Rask’s Investor Club Newsletter Today

You can join Rask’s FREE investor’s club newsletter today for all of the latest news and education on investing. Join today – it doesn’t cost a thing. BUT, you’ll need a good sense of humour and a willingness to learn.

Join today.

Disclaimer: This article contains general information only. It is no substitute for licensed financial advice and should not be relied upon. By using our website you agree to our Disclaimer & Terms of Use and Privacy Policy.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Skip to content