Westpac’s decision to increase its standard variable rate discount could be a sign that the lender expects the Reserve Bank to cut rates at today’s Board meeting, RateCity chief executive Damian Smith has claimed.
Yesterday, Westpac announced it would increase its standard variable discount to 0.70 percentage points from 0.40 per cent to home loans from $150,000 on the same day the Reserve Bank meets to decide on changing the official cash rate.
“Westpac has jumped the gun and announced fixed rate reductions and a variable rate discount before the Reserve Bank meeting tomorrow. It seems like Westpac are betting on the RBA to drop the official cash rate,” Mr Smith said.
“It also gives some cover for Westpac to pass on less than the full cash rate reduction, by pointing to these discounts and fixed rate cuts.”
Mr Smith said borrowers need to compare final rates, rather than focusing solely on the size of the discount.
“Lenders are getting more creative when it comes to offering discounts and incentives for home loans. But borrowers need to remember that big discounts don’t mean you are getting the best home loan deal,” he said.
“We’re in a new lending environment where many lenders are moving their interest rates independently of the RBA, whether it’s by not passing on the full rate cuts to their customers or creeping their rates up slowly every few weeks.”