Westpac (ASX: WBC) has caught its rivals off guard after yesterday dropping its one-year fixed-rate home loans to 4.79% — but will it go lower?
Bank of Melbourne and St George (subsidiaries of Westpac) both lowered their rates even further, cutting mortgage rates to their lowest points since the GFC. Bank of Melbourne Chief Executive Scott Tanner said that the move was the result of the RBA’s rate cut earlier this month, which gave the home loan marketplace a “confidence booster”.
Since the rate was cut, the big banks have been hurrying to impress the market, with all of them passing on the rate cut in full except ANZ (ASX: ANZ), which went further than the 25 basis points and gave customers a 0.27 percentage point cut. The moved matched the NAB’s (ASX: NAB) rates and challenged its title as the lowest lender.
Kirsty Lamont of comparison site Mozo said that “I think it presents a bit of borrower’s dilemma about whether to lock in now or hold back and see if rates fall further” but says that “the fact that the banks are cutting their fixed rates so aggressively shows they are pricing further rate cuts”. Westpac says that home loan take-ups doubled when it dropped its interest rate in February.
Westpac is trying to entice potential mortgagees with its low fixed rate offer but it still has the highest standard variable mortgage, currently at 6.26%.
Recently, the big four banks’ share prices have soared, fuelled by record profits from cost-cutting. Perhaps the major exception to this is ANZ’s ‘Super Regional Strategy’, which has been growing revenues from its Asian expansion over the past five years. With a lack of growth, the banks will be looking to secure their inflated share prices by gaining market dominance in home loans to avoid a premature drop. This has been a consistent source of income for the big four, including the Commonwealth Bank (ASX: CBA).
The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Owen Raszkiewicz owns shares in ANZ.
These 3 stocks could be the next big movers in 2020
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.
*Returns as of 6/8/2020
- ALL ORDINARIES finishes higher Monday: 10 shares you missed – October 30, 2017 4:44pm
- Are these the secrets behind Australia’s best ASX investors? – October 30, 2017 3:43pm
- My Aussie Share Market Investing Do’s of 2017/2018 – October 30, 2017 1:13pm