Westpac splits floating rate

It may lead the market, but the rate is just one basis point below what Kiwibank has been offering customers for some time.

The move to split the card across all fixed and floating rates is in response to the Reserve Bank’s LVR requirements and to help make the decision making process easier for customers in assessing what options are available to match their circumstances.

The introduction of the new 5.64% standard floating rate for new lending is designed to give a competitive floating option for customers with more than 20% equity, the bank says

General manager retail, Ian Blair, said as conjecture on when the official cash rate might move continues, more customers are looking at their options and splitting their loan to take advantage of rate certainty (fixed) and repayment flexibility (floating).

“At 5.64%, our floating rate is very similar to our two year fixed term special rate (5.59%), which is a popular one. This is about giving customers competitive choice in how they structure their home loans.”With the splitting and simplifying of the card, the 25 and 50 month terms for high LVR borrowers are no longer needed. Instead, fixed rates are available for all terms from 18 months to five years along with floating and capped one and two year term options. Customers can choose to offset their transactional and savings balances against their standard floating loan balance to save on interest.

Comments from our readers

On 9 December 2013 at 2:07 pm Simon Rule said:

"It (Westpac) may lead the market, but the rate is just one basis point below what Kiwibank has been offering customers for some time."

I truly hope borrowers aren't simply happy to accept their banks advertised floating home loan rate nowadays. Unfortunately the reality is most don't know they can even ask the question of their bank and so get suckered into chasing a cheaper fixed rate when floating (with a good discount applied) may have perhaps been the better option for them.

Westpac have always been half percent above the other banks when it comes to their advertised floating home loan rate (they have never been able to satisfactorily explain why this is) but have been prepared to discount this by up to one percent when pushed hard enough by a mortgage broker or the savvy customer themselves.

I secured for an ASB client on Friday a floating home loan rate of 5.45% and this couple currently have less than 20% equity. Today I've have negotiated a floating rate of 5.20% with ASB for a client with greater than 20% equity.

On 10 December 2013 at 10:05 am krish said:

As a broker, I was comfortable with Westpac's previously advertised floating rate of 6.25%pa. Almost in 100% of the cases, I was able to get close to 1.0% discount off that making it just as competetive with other banks.

Agree with previous comments that most bank clients don't know that they can negotiate the rates but that is exactly why they need to use a broker.

If banks stop the negotiations including with the brokers, we might as well close the shop. Negotiation is a good skill set of mine and I enjoy telling my clients what I achieved for them.

On 10 December 2013 at 10:23 am aileen cutting gardner said:

Borrowers can negotiate anything- one needs to lay their cards on the table and take it from there. I have had $1.7mill worth of mortgages and negotiated everyone of them.
Nothing ventured nothing gained I say.

Westpac splits floating rate

Westpac is the first bank to split its full mortgage card to above and below 80% LVRs and has dropped its standard floating rate to what it calls a "market leading" 5.64%.

Monday, December 9th 2013, 11:47AM 3 Comments

Comments from our readers

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