Rate gap spurs refinancing activity

Staff Reporter Wednesday, 6 Jan 2010 1 minute read

Brokers have seen an upswing in refinancing activity with some customers opting to switch out of Westpac loans in search of lower rates.

In December, Westpac lifted its interest rates 0.2 per cent above the Reserve Bank’s 25 basis point movement.

Since then, AFG has reported a “large proportion” of its business has come from Westpac customers looking to switch lenders.

AFG general manager sales and operations Mark Hewitt told The Age that while normally people think it’s not worth their while to move for 20 points, many people are choosing to do so as a form of protest.

''It's hard to switch banks, but when you feel strongly about something you tend to endure a bit of pain to get your point across,” Mr Hewitt said.

''There certainly haven't been people leaving in droves, and we have even been writing some new Westpac business to existing Westpac customers, but we are seeing a particular type of customer who feels strongly enough to vote with their feet.''

Westpac's decision to push up its variable mortgage rates by almost double the Reserve Bank has opened up the biggest gap between the rates quoted by the big banks.

An NAB mortgage is now 27 basis points cheaper than a Westpac mortgage, representing a saving of $50 a month on a $300,000 loan.