Westpac has repriced its range of fixed rate mortgages for home borrowers as the cost of term funding continues to escalate.
The country’s second largest bank has hiked most principal and interest fixed rate loans for owner occupiers by between 50 and 60 basis points.
While the repricing brings Westpac-branded fixed rate products more into line with the other major banks, Westpac remains a price-leader according to tables published on the Canstar website.
The bank’s three- year P&I fixed rate for owner occupiers not requiring mortgage insurance has increased 50 basis points to 5.79 per cent, while the five-year offer has risen 60 bps to 6.09 per cent.
Westpac’s new three-year rate is equal to NAB’s latest offer, but is cheaper than CBA (6.39 per cent) and ANZ (5.89 per cent).
In a notification to mortgage brokers issued on Wednesday, Westpac said the repricing was in response to higher funding costs.
“In making these decisions, we consider multiple factors including the need to manage pricing in a sustainable way,” the bank told brokers.
“These changes reflect the continued increase in funding costs.”
In a separate announcement, Westpac also said that it would soon reduce the value of cash incentives paid to borrowers refinancing from other lenders.
From 1 August, borrowers not requiring lender’s mortgage insurance who refinance with Westpac will be eligible for a A$2000 cash reward.
The bank currently shells out $3000 to eligible borrowers who take up its refinance offer.
Westpac is continuing to pursue a multi-pricing strategy across its portfolio of regional bank brands.
In most cases, fixed rate borrowers are able to secure lower rates and bigger cashbacks by refinancing loans through St George, Bank SA or the Bank of Melbourne.
St George and Bank SA have not yet repriced their fixed rate offers for three-year P&I mortgages.
Both banks are selling these mortgages at 5.19 per cent.
Bank of Melbourne offers a three-year fixed rate mortgage priced at 5.34 per cent.
The three regional brands also trump their parent’s flagship brand by offering refinancing borrowers a cashback incentive of $4000.