Westpac Rate Increase – 4 December 2009
This information is prepared for existing Westpac customers
Q.
A.
What has changed?
F ollowing the Reserve Bank of Australia (RBA) decision to increase the cash rate by 0.25% p.a. Westpac have
announced the following interest rates will be changing:
Mortgages
•Westpac’s standard variable home loan interest rate will increase by 0.45% p.a. (effective 4/12/09).
Details of changes to your repayments are outlined below.
Credit Cards
estpac’s low rate credit cards rate will increase by 0.25% p.a., with rewards cards increasing by 0.35% p.a.
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(both effective 14/12/09).
Deposit Products
estpac is offering competitive interest rates on a range of personal and business deposit products*.
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Visit your local bank manager or westpac.com.au to find out more.
Q.Why has Westpac announced an increase in variable rates by more than the RBA cash
rate increase?
A.
ur interest rates are continuously under review, and are priced independently of the position of the RBA. Our funding
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costs have increased significantly due to the continued pressures of the economic climate. While the cost of providing
funds is influenced by the RBA’s cash rate, it is not governed by it.
To give you a bit more background, the money we lend to our customers comes from two sources. First, from the
customers who place their deposits with us. And second, by borrowing from wholesale money markets. The cost of
rising deposit rates and the cost of borrowing from wholesale money markets has increased significantly, so we can no
longer absorb this cost.
Q.Will you also increase variable rates for St.George, BankSA and RAMS?
And by how much?
A.
estpac has announced increased rates independently of St.George, BankSA and RAMS. Each business is reviewing
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their interest rates independently.
Mortgages
Q.
A.
Q.
A.
How much will my home loan repayment increase by?
e are currently calculating what your new repayments for variable rate home loans will be. As a guide, the monthly
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principal and interest repayment on a 25 year variable rate mortgage with a balance of $250,000 will increase by $71.
Also refer to the Payment Table guide at the end of this document. You will be provided with the appropriate notice.
When will my repayment change? When will I be notified?
ustomers making principal and interest repayments will start receiving notices outlining the specific changes to
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repayments from January 2010. The new repayments will start to take effect from late February 2010. Specific dates
will be outlined in Westpac’s January 2010 notice to you (in accordance with legal requirements).
Customers with variable rate home loans making interest only repayments will continue to have interest calculated
daily on outstanding balances from 4 December 2009, at the higher interest rate.
For fixed rate home loan customers there is no change to repayments.
Q.I have a package discount on my home loan rate – will this increase impact the amount
of my discount?
A.
The amount of the package discount will not change as a result of the change to the variable rate.
Q.
Is this a good time to fix my home loan interest rate?
A.
The answer to this question will depend on a number of factors, which include:
•Your personal circumstances and financial goals
•Your level of comfort in the event of your current variable interest rate increasing.
•Your requirement or desire to make large additional repayments to your loan – most fixed rate loans set a limit on
the amount of additional repayments you can make during a fixed rate period.
•Your home ownership horizon (i.e. how long you plan to keep your home loan) – if you choose to repay your loan or
sell your home during the fixed rate period, you may incur break fees for terminating the contract early.
•The rate and speed of potential increases in variable rates. This is difficult to predict. Another option you may want
to consider is only fixing a part of your loan to give you the best of both worlds – fixed rate certainty and variable
rate flexibility.
Q.
I can’t afford to make payments if rates are going to rise. Who do I contact?
A.
If you are experiencing financial hardship or difficulty, please contact Westpac Assist on 1800 067 497. Westpac Assist
is made up of a team of professionals with the decision-making power and banking knowledge to create fast potential
solutions to your financial pressure. You can speak to them confidentially, get personalised solutions, and have helpful
adjustments made to your accounts on the spot if you qualify.
Q.Shouldn’t the banks be trying to support economic recovery rather than holding it back
through rate changes?
A.
e realise that this increase will have a direct impact on our customers and it’s not a decision we’ve taken lightly.
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Recently, the margin on home loans has been progressively reduced through increases in our funding costs to a level
that is not sustainable. Like all businesses, we’re trying to balance the needs of our customers with the fact that our
funding costs have increased substantially since the start of the global financial crisis.
Westpac is committed to providing fair value to customers. This also means that if and when funding conditions
change we will be just as responsive in reviewing Westpac’s rates.
Deposits
Q.
A.
Why hasn’t Westpac passed on this increase to all deposit accounts?
estpac offers a broad range of products to our customers and prices these products differently, taking into account
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market needs and the competitive landscape. We believe we offer good rates across our product range - with some
rates being the best in market in their class.
How your repayments may be affected
The following table is based on a 25-year standard variable rate mortgage making principal and interest repayments. Please
note that your actual repayment figures may vary from this.
Loan size
Estimated new fortnightly repayments
Estimated new monthly repayments
$100,000
$319
$692
$150,000
$478
$1037
$200,000
$638
$1383
$250,000
$797
$1729
$300,000
$957
$2075
This information is a guide only. A formal Repayment Change Notice will be sent to borrowers in accordance with legal
requirements in due course.
*Read the terms and conditions, available from any Westpac branch. This information has been prepared without taking account of your objectives, financial
situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial
situation and needs. Issued by Westpac Banking Corporation, ABN 33 007 457 141 AFSL 233714.