A major bank has increased its longer-term fixed home loan rates while cutting its six-month rate, citing a sharp rise in wholesale interest rates.
Westpac is lifting rates on two- to five-year terms by 30 basis points (0.30%), while cutting its six-month special rate by 20 basis points (0.20%) to 4.69% per annum.
The bank said wholesale rates had risen by more than 40 basis points (0.40%) since the day before the Reserve Bank’s November official cash rate (OCR) announcement.
A Westpac spokesperson said the six-month term was now the lowest of the five biggest banks. Managing director of product, sustainability and marketing, Sarah Hearn, said the bank was holding back some of the cost increases for customers.
“We were the first of the five biggest banks to cut our variable lending rates following the official cash rate cut two weeks ago,” she said.
“Conversely, fixed rates are mainly driven by movements in wholesale interest rates rather than the OCR. While the OCR has fallen, wholesale rates have lifted materially, by more than 0.4% on longer terms since the day before the OCR announcement.
“With today’s changes, we’re holding back some of the increase in wholesale borrowing costs to customers, while also offering great value for those looking for short-term flexibility with our new six-month advertised special rate.”
The two-year special rate would rise to 4.75%, while three-year, four-year and five-year terms would all increase to between 5.05% and 5.29%.
The one-year and 18-month rates would be unchanged at 4.49% and 4.45% respectively.
Westpac was also raising term deposit rates for periods of one year or longer, with increases of between 10 and 30 basis points.
Hearn said the bank was moving to support savers through the falling interest rate environment.
“We also know savings customers are watching falling interest rates closely, and we’re moving to support them by raising all term deposit rates one year or longer.
“We’ve held our variable notice saver rate unchanged at 3.00% per annum through the last three OCR cuts, which is a good option for those who would rather lock in their money for a shorter time frame.”
