Westpac slashes packaged home loan rate UNDER 4% Westpac has almost doubled the rate discount on packaged home loans to 1.29 per cent from 0.7 per cent. The variable rate on Westpac’s Rocket Repay mortgage has gone from 4.98 per cent to 3.69 per cent for all loan applications lodged from Monday, 22 July. Westpac is also abolishing the $250,000 tier for cheaper home loan rates. Borrowers who take up a package deal are eligible for discounts on home insurance and fee waivers on credit cards and transaction accounts. Westpac’s Basic variable rate home loan is currently set at 4.33 per cent pa (comparison rate 4.38 per cent). Commonwealth Bank’s discounted package home loan rate is currently 4.52 per cent. NAB’s packaged rate is 4.07 per cent and ANZ is charging 4.13 per cent to packaged borrowers. Big bank packages vs small lender rates. The major banks have been losing home loan market share in 2019 as the pricing gap between their packaged rates and the market-leading offers has widened. Only Westpac has a packaged home loan rate under 4 per cent (3.69 per cent from 22 July). Small non-bank lenders are currently offering headline and comparison rates around 3 per cent. such as Reduce Home Loans (2.89 per cent comparison rate), Freedom Lend (3.04 per cent comparison rate) and Homestar (3.07 per cent comparison rate). Compare low rate home loans from Australia’s banks, credit unions and other lenders at infoChoice. Four new banks opening in Australia. Australia’s banking regulator APRA has approved three new online banks – Volt Bank, Judo Bank and, most recently, 86 400. Another bank, Xinja, is operating on a restricted licence. Xinja expects to be granted a full banking license in August. Volt Bank, Judo Bank, 86 400 and Xinja all operate through apps and do not have retail branches. The new online banks are often referred to as neo banks. How safe is a neo-bank? What is a neo-bank? A neo-bank is a term meaning new, online bank. Four neo-banks are currently going through the last of the regulatory hurdles to become fully licensed deposit-taking institutions in Australia. Neo-banks do not have branches so are they safe and trustworthy safe havens for depositor cash? Xinja chief executive Eric Wilson told The New Daily: “Deposits are guaranteed in the same way as it would be with Commonwealth Bank.” Home loans discounts could be phased out. Westpac has announced a new low variable rate of 3.69 per cent for packaged home loans. Other banks are expected to follow Westpac in announcing new discounted loan rates for borrowers who package their loan up with other products, like credit cards, insurance, transaction account or offset account. The government’s Productivity Commission investigated loan pricing in 2018 and expressed concern that discounts on package deals might make the actual rate price of the loan difficult to determine. The ACCC is working on “an online tool to improve the transparency of the mortgage interest rates paid on new loans.” Package rates, discount rates, what is the REAL rate? Do big banks offer discounts off the rates they advertise to sign up borrowers? Yes and the banking industry watchdog doesn’t like it. Big banks could even have the power to advertise their rates taken away from them under some radical ideas being considered by regulators. The Council of Financial Regulators wants borrowers to be able to compare loan rates easily. One proposal is that the list of home loan products featured on financial comparison websites and mortgage broker panels will feature not the lender’s advertised rate but a rate based on actual interest rates charged in recent weeks.