Westpac announced hefty drops of up to 80 basis points to its fixed rates for both owner occupiers and investors on Wednesday.
It's followed National Australia Bank and Macquarie, as well as a run of smaller lenders, who've made generous cuts to their fixed rate mortgage offerings in recent months.
Some commentators are speculating it could be a sign the big banks are laying the groundwork for the next round of "mortgage wars" in the run-up to the first cut in the official cash rate.
It's likely the recent drops in term deposit rates for savers could be a hedge against mortgage competition down the track, should rate cuts happen in 2025.
Markets holding out for 2024 rate drop
Although RBA governor Michele Bullock all but ruled a cash rate cut in 2024 when she appeared before a parliamentary committee last week, traders are still betting on a cut before Christmas.
Any imminent mortgage war is good news for homeowners and refinancers who've been looking for some interest rate relief in the current cost-of-living squeeze.
But it seems some new borrowers may be losing patience with the promise of interest rates cuts, with fixed rate lending recording a notable uptick in the latest ABS lending figures.
The June data showed fixed rate mortgages accounted for 2.6% of new home lending by value in June, up from just 1.2% in April.
The big banks' move to slash their fixed rates could be a bid to lure borrowers to lock in at lower interest rates before variable rates follow - eventually.
Westpac was not alone in dropping fixed rates this week, but that's where we'll start.
Westpac moves
Westpac's headline fixed rate is an eye-catching 5.89% p.a. (7.45% p.a. comparison rate*) which includes a 0.10% p.a. discount for loan-to-value ratios (LVR) up to 70% fixed for two years as part of the bank's Premier Advantage package.
Here's a rundown of the new fixed rates for owner occupiers making principal and interest (P&I) repayments:
| Product | Change (%) | New rate | Comparison rate* |
| Fixed Options 1 year ≤70% | -0.5 | 6.39% p.a. | 8.68% p.a. |
| Fixed Options 2 year ≤70% | -0.6 | 6.19% p.a. | 8.39% p.a. |
| Fixed Options 3 year ≤70% | -0.7 | 6.19% p.a. | 8.16% p.a. |
| Fixed Options 4 year ≤70% | -0.7 | 6.19% p.a. | 7.94% p.a. |
| Fixed Options 5 year ≤70% | -0.8 | 6.19% p.a. | 7.75% p.a. |
Those signed up to Westpac's Premier Packages get a 0.20% p.a. discount on the above rates and with a further 0.10% p.a. discount for LVRs up to 70%.
This means quite a few products are now below the 6% threshold.
Great Southern also heads south
The Queensland-based bank joined the party in dropping its fixed rates for owner occupiers and investors by as much as 60 basis points this week.
Great Southern's best new rate in this spate of cuts is also under 6% p.a., offering 5.99% p.a. (7.47% p.a. comparison rate*) for owner occupiers making P&I repayments for a three-year fixed period - a 50-basis point drop.
Here's a rundown of the new owner occupier rates for P&I repayments.
| Product | Change (%) | New rate | Comparison rate* |
| Fixed P&I 1 year | -0.2 | 6.49% p.a. | 7.90% p.a. |
| Fixed P&I 2 year | -0.4 | 6.14% p.a. | 7.68% p.a. |
| Fixed P&I 3 year | -0.5 | 5.99% p.a. | 7.47% p.a. |
| Fixed P&I 5 year | -0.6 | 6.09% p.a. | 7.20% p.a. |
ME too
The Bank of Queensland-owned ME Bank also made big cuts to its Flexible fixed rate home loans this week, slashing some rates by up to 65 basis points.
Its lowest new fixed rate is 5.94% p.a. (7.86% p.a. comparison rate*) for its Flexible fixed loan for LVR ≤80% and P&I repayments fixed for three years.
Here's a selection of ME's new Flexible fixed rates for owner occupiers:
| Product | Change (%) | New rate | Comparison rate* |
| Flexible Fixed P&I ≤80% 1 yr | -0.25 | 6.49% p.a. | 8.43% p.a. |
| Flexible Fixed P&I ≤80% 2 yr | -0.4 | 5.99% p.a. | 8.11% p.a. |
| Flexible Fixed P&I ≤80% 3 yr | -0.35 | 5.94% p.a. | 7.86% p.a. |
| Flexible Fixed P&I ≤80% 4 yr | -0.2 | 6.29% p.a. | 7.77% p.a. |
| Flexible Fixed P&I ≤80% 5 yr | -0.3 | 6.29% p.a. | 7.60% p.a. |
Newcastle Permanent cuts fixed rates
Newcastle Permanent got in on the act on Friday, making 30 basis point cuts a range of its fixed rate products, including its Premium Plus Package Special Offer fixed loans and Residential Fixed loans for both P&I and interest only (IO) payments.
The mutual bank now also features sub-6% fixed loans including its Premium Plus Package fixed rate Special at 5.99% p.a. for periods of one, three, four, and five years (comparison rates* ranging from 7.32% p.a. to 7.94% p.a.).
The rate for a two-year fixed period drops to 5.89% p.a. (7.73% comparison rate*).
Newcastle’s Special rates are only currently available to loans with LVRs of less than or equal to 80%.
Borrowers needing higher LVRs will pay an extra 0.10% p.a. in interest on top.
Variable rate tweaks
With all the focus on fixed rate cuts of late, Newcastle has also made some minor downward adjustments to its Premium Plus Package and Real Deal Special Offer variable rates, dropping them by up to 10 basis points.
Its new headline variable rate is 6.04% p.a. (6.08% p.a. comparison rate*) for its Real Deal home loan special for new owner occupier loans.
Existing borrowers can also get the lower rate provided the loan size is above $150,000.
Greater Bank also drops variable rates
Finally this week, Greater Bank has cut its Ultimate and Great Rate Discount variable ranges by up to 10 basis points.
Its best new rate has now dropped below 6% to 5.99% p.a. (6.00% comparison rate*) for its Great Rate Discount variable loan for owner occupiers with LVR ≤80% making P&I repayments.
Greater's Great Rate loans come with no monthly or annual fees and no establishment fees.
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| 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 |
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5.69% p.a. | 6.16% p.a. | $2,899 | Principal & Interest | Fixed | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 5.90% p.a. | $2,995 | Principal & Interest | Variable | $0 | $0 | 80% | Apply in minutes |
| Promoted | Disclosure | |||||||||
6.09% p.a. | 6.11% p.a. | $3,027 | Principal & Interest | Variable | $0 | $250 | 60% |
| Promoted | Disclosure |
Image by Vitaly Gariev on Unsplash
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