Westpac has just taken a “chainsaw” to interest rates in a move set to fire up competition dramatically in the mortgage market. Picture: NCA NewsWire/ Luis Ascui
One of Australia’s biggest banks has just shocked the mortgage market with a triple rate cut in one go – becoming the first of the majors to dive below the 5pc mark.
Canstar data insights director Sally Tindall said the massive move amounted to a big four bank taking a “chainsaw” to interest rates, with Westpac announcing a massive 0.7 percentage point slashing of its fixed rates – dropping to as low as 4.89pc for its two-year term.
RELATED: ‘No excuse’: Banks slammed for refusing rate cut
Future RBA cuts dead after horror reveal
Big Aus bank slashes rate lower than RBA call
A massive 27 lenders now have at least one fixed rate under 5pc. Source: Canstar
The move includes the rest of its group of banks St George Bank, Bank of Melbourne and BankSA and while it’s restricted to owner occupiers on principal and interest loans with a 30 per cent deposit, the announcement is expected to trigger the rest of the industry into responding in similar dramatic fashion.
Canstar’s database shows 30 banks have cut at least one fixed rate in the past month, as lenders rush to stay competitive, with 27 lenders offering at least one fixed rate under 5 per cent, compared to none at the start of 2025.
“This is also the first time in the current cutting cycle that a big bank has dropped a fixed rate below the 5 per cent benchmark,” Ms Tindall said.
“That’s a considerable milestone and signals just how competitive the mortgage market is.”
MORE: Shock social media money trends fooling Aussies
Secret ‘free’ master key unlocking Aussie doors for decades
NRL gun’s quiet $1.1m side hustle
Canstar data insights director Sally Tindall said fixed terms were falling fast despite it not being popular yet with borrowers testing the market.
Westpac changes announced Friday apply across its group of banks. Source: Canstar.
In some cases, fixed terms have begun falling up to 90 percentage points already, Canstar said, with competition heating up despite latest inflation figures showing the Consumer Price Index rose in the year to July.
The lowest fixed rate on the market (excluding green loans) is currently 4.69pc by Easy Street Financial Services on a 2-year term – leaving at least 20pp to go for the majors.
Ms Tindall said for borrowers “the maths between the lowest fixed and variable rates is tight and ultimately depends on the future of the cash rate”.
“While the RBA has said that further easing is likely, there’s still not a huge amount of clarity on how many cuts are to come in the cycle. Plus, there’s always the wildcard that some banks might not pass on future cuts in full.”
She was not surprised many were choosing to stick with variable for now.
“However, if you do like the idea of fixing and know it will suit your finances, spend time shopping around for a competitive rate.”
English (US) · 