In another sign the market may be in for another round of mortgage wars, Westpac has announced the new online-only refinance rate for owner occupiers with up to 70% loan-to-value ratio (LVR).
The so-called 'Special Online Refinance Offer' is a 35 basis point cut on Westpac's previous lowest rate of 6.19% p.a. and matches ANZ Plus's lowest big bank refinance rate.
Westpac's new Flexi First Option special rate of 5.84% p.a. (5.85% p.a. comparison rate*) is available to direct-to-bank, online refinancers making principal and interest (P&I) repayments.
Investors are being offered a rate of 6.09% p.a. (6.10% p.a. comparison rate*) under the same conditions, including having an LVR under 70%.
Refinanced loans must come from outside the Westpac group, which includes St George, Bank of Melbourne, BankSA, and the now-defunct RAMS.
Mortgage wars round two
The new Westpac rate equals ANZ Plus's rate for app-based refinancers which comes with a $2,000 cash back offer for eligible customers before 31 March.
See also: Home Loan Offers and Deals March 2025
ANZ offers the rate to refinancers making P&I repayments but with an LVR up to 80% (depending on the home's location).
The loan must be applied for and managed only through the ANZ Plus app.
Westpac's move indicates maneuvering is well underway for another round of refinancing wars in the wake of the Reserve Bank's decision to lower the cash rate in February, with further cash rate cuts expected during 2025.
It follows the post-Covid refinancing wars where big banks joined the fray in offering cashback deals and discounted interest rates in a bid to scoop up customers rolling off low fixed mortgage rates during the pandemic.
CommBank smoked
The 5.84% p.a. now offered by both Westpac and ANZ trumps CommBank's lowest refinance home loan rate of 5.90% p.a. (6.03% p.a. comparison rate*) offered through its Digi Home Loan.
Australia's biggest home lender is offering the rate to digital-only refinancing owner occupiers with a LVR 60% or less.
The rate rises to 5.94% p.a. (6.07% p.a. comparison rate*) for those with an LVR between 70.01-80%.
The other big four bank NAB may well be considering its war chest with its lowest advertised "featured offer" rate of 6.19% p.a. (6.23% p.a. comparison rate*) for owner occupiers paying P&I.
However, NAB's wholly-owned digital subsidiary ubank is matching Westpac and ANZ's digital-only refinance rate with its 5.84% p.a. (5.86% p.a. comparison rate*) for LVRs up to 60%.
Who is refinancing?
In launching the new rate, Westpac reported it had seen a 45% increase in people refinancing their home loans with the bank over the past quarter.
Australian Bureau of Statistics home lending data is not yet in for the March quarter but even before the cash rate cut in February, external refinancing was up 28.5% over the last three quarters of 2024.
Westpac's latest Home Ownership report found almost a third of homeowners (30%) are considering refinancing while more than four in five (82%) of refinancers want the process to be more digitised and less time consuming.
Serviceability exemptions grease the refinancing wheels
Home loan refinancing fell off a cliff by September 2023 as RBA interest rate rises took hold and left many in a 'mortgage prison'.
However, since the major banks reduced serviceability buffers for eligible refinances nearly two years ago, the level of exceptions and waivers to serviceability has skyrocketed.
Quarterly banking data recently released by APRA shows serviceability exceptions and waivers reached record highs of $8.34 billion and $4.93 billion respectively.
The level of exceptions has doubled since banks started exempting some refinancers in mid-2023.
Ordinarily banks are expected to apply a 3% buffer to new home loan applications - this means if a mortgage rate is 6%, applicants will be stress tested to 9% to make sure they can cover their home loan repayments.
However, this isn't a hard-and-fast rule; with waivers in place, banks have lowered this to 1-2% for strong refinancing applications.
APRA data does not discriminate between exceptions and waivers for new loans, and those for refinances.
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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.79% p.a. | 5.83% p.a. | $2,931 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.74% p.a. | 5.65% p.a. | $2,915 | Principal & Interest | Variable | $0 | $0 | 80% | Apply in minutes |
| Promoted | Disclosure | |||||||||
5.84% p.a. | 6.08% p.a. | $2,947 | Principal & Interest | Variable | $250 | $250 | 60% | 100% offset |
| Promoted | Disclosure |
Image by Scancode Productions via Unsplash
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