The Red Bank becomes the first major to break out of the tight range of mortgage rates being offered by the majors, cutting both fixed home loan rates modestly (and term deposit rates by more) even as wholesale rates rise

Despite rising wholesale rates, Westpac has become the first major to cut fixed mortgage rates.

It follows challenger bank Heartland which moved down yesterday (Thursday).

However, Westpac's shift lower was more modest than the Heartland one.

And despite recently raising six and eight month term deposit rates, Westpac has trimmed a number of other term deposit rates at the same time.

Their term deposit rate cuts average -20 basis points (bps) while its home loan rate cuts average -10 bps.

These cuts come with wholesale markets having raised swap rates by +5 to +7 bps since the start of February.

For example, Westpac's new one year fixed home loan rate has tightened -13 bps to swap, their three year rate has tightened by -16 bps.

On the term deposit (TD) front, it has reduced the one year offer to swap by -53 bps (from +65 bps to +12 bps), and the three year by -66 bps (from +139 bps to +73 bps).

This move by Westpac breaks the pricing lockstep all five major banks have been in with each other in 2024 especially on the home loan front, something that seemed unnecessarily risky given that the Commerce Commission is currently running a Market Study into bank behaviour on home loan pricing.

Wholesale swap rates have recently ticked higher, helped along by market sentiment that sees a rising chance the Reserve Bank's Official Cash Rate might rise at the end of the month. Global pressures are also at play.

Obviously you should negotiate and shop around. Most banks will discount their carded home loan rates if you have strong financials. You shouldn't need them but if you are uncomfortable negotiating, a broker can often be helpful. But be aware some brokers won't offer you the best over the whole market, only the banks they have approved connections to in their "lending panel." And clearly bank mobile managers are there to pitch their company's own product.

They may even offer savers higher than carded rate offers.

One useful way to make sense of the changed home loan rates is to use our full-function mortgage calculator which is below. (Term deposit rates can be assessed using this calculator).

And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options. But break fees should be minimal in a rising market. They will become important in a falling market however.

Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at the moment.

Fixed, below 80% LVR	6 mths	1 yr	18 mth	2 yrs	3 yrs	4 yrs	5 yrs
as at February 9, 2024	%	%	%	%	%	%	%
ANZ	7.35	7.39	7.15	6.89	6.75	7.34	7.34
	7.39	7.39	7.15	6.89	6.65	6.55	6.55
	7.39	7.35	7.15	6.89	6.79	6.75	6.75
	7.39	7.35		6.89	6.75	6.69	6.59
	7.39	7.29 -0.10	6.95 -0.20	6.89	6.65 -0.10	6.59 -0.10	6.39 -0.10
Bank of China		7.09	6.99	6.89	6.79	6.69	6.59
China Construction Bank	7.19	7.09	6.89	6.75	6.49	6.40	6.40
Co-operative Bank	7.39	7.35	7.15	6.89	6.75	6.75	6.75
Heartland Bank		6.69 -0.30	6.59 -0.30	6.45 -0.40	6.19 -0.46
ICBC	7.19	7.05	6.95	6.85	6.59	6.49	6.49
	7.45	7.45	7.25	6.95	6.79	6.69	6.59
	7.39	7.39	7.19	6.75	6.75	6.79	6.79