One of the major banks has announced a double change to its home loan rates.
As of June 30, Westpac will drop its variable home loan interest rate for its customers who paying down their mortgage debt.
The reduction will be eight basis points and will apply to owner occupiers who are paying principal and interest on their owner occupier loans, taking their standard variable rate down to 5.24 per cent.
On the flipside, investors with interest-only loans will be hit with a big rate hike. Those loans will attract a rate hike of 34 basis points, sending the rate northwards to 6.3 per cent.
Westpac’s George Frazis said it was good for owner occupiers and the move was designed to get any owner occupiers paying interest-only to switch to principal and interest and get themselves a better deal.
“We hope the rate reduction will encourage owner occupier customers with interest-only home loans to switch to principal and interest repayments, helping them to pay down their home loan in this low interest rate environment,” he said in a statement.
According to Mr Frazis, the bank will not charge a fee for switching loans, and says the bank is responding to pressure from banking regulators.
“APRA’s new limit on interest-only lending is 30 per cent of new residential mortgage lending, so we have to continue to make changes to our interest-only rates and lending policies to meet this benchmark,” Mr Frazis’ statement said.