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Borrowers can now access up to 10 offset accounts and tweaked rates at Westpac, as the major bank chases growth in an increasingly competitive market.
Major bank Westpac has announced a range of updates to its home loan offering, including rolling out multiple offset accounts and tweaking variable rates.
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On Monday (17 February), the major bank released its financial results for the first quarter of its financial year 2025 (ending 31 December 2024), in which it revealed that balances in offset accounts continue to build, with $66 billion now held by Westpac Group borrowers in offsets.
Indeed, the major bank has recorded a 37 per cent increase in offset accounts opened over the past five years, as well as a 63 per cent increase in offset account balances over the same period.
The major bank revealed it has now rolled out multiple offset account options to home loan customers for no additional fee, as already offered by subsidiaries St.George, Bank of Melbourne, and BankSA.
The new feature – available by request through brokers on behalf of eligible customers – will enable customers with an eligible home loan to manage up to 10 offset accounts online from March or by visiting a branch/calling the bank.
According to Westpac, up to 44 per cent of Australians use offsets to pay off their loan more quickly.
In fact, the vast majority of Westpac Group customers are now ahead of their repayment schedule. The 1Q25 results showed that a quarter of Westpac Group mortgagors are now more than two years ahead of schedule, more than a fifth (21 per cent) are one to five months ahead, 17 per cent are between six and 24 months ahead, 18 per cent are around a month ahead, and 17 per cent are on time for their repayment schedule.
Speaking of the new offset offering on Monday (17 February), Westpac’s managing director of mortgages, Damien MacRae, said: “With interest rates top of mind for Australians, we know many customers are thinking about how to get ahead on their home loan.
“We’ve seen a steady increase in customers building up their offset balances.
“We will be rolling out the option for customers to set up to 10 offset accounts to offer greater flexibility in how they manage their savings, while reducing the interest charged on their home loan.
“Multi-offset accounts can also allow customers the flexibility to open a home loan with family or friends and still reduce their interest payments while keeping their broader finances separate.”
As well as updating its offset policy, the bank has also recently tweaked its lowest advertised variable rate offering. While its lowest advertised rate was previously 6.44 per cent, this was only valid for two years, after which the rate increased by 0.40 percentage points.
However, the bank has now removed the 0.40 percentage point, making it clearer for borrowers that the variable rate is 6.44 per cent per annum (6.45 per cent comparison). This includes a 1.64 per cent life-of-loan discount and a 0.10 per cent discount for those with a loan-to-value ratio (LVR) below 70 per cent.
The changes come as the bank continues to see strong mortgage book growth and prepares for an expected rate cut from the Reserve Bank of Australia (RBA) on Tuesday (18 February), which could further increase home loan competition.
While delivering the bank’s first-quarter results on Monday, Westpac CEO Anthony Miller said: “Cost of living pressures and high interest rates remain challenging for some customers while many businesses face cost pressures and lower demand. Encouragingly, inflation has eased and we could see the Reserve Bank of Australia reduce the cash rate as early as tomorrow (18 February). This should provide some relief to households and, over time, support business activity.
“We encourage customers to call us if they need help.”
Broker originations grow at Westpac Group
According to the bank’s 1Q25 update on Monday, Westpac Group saw loan growth of $13.4 billion in the December quarter, with Australian housing loan growth (excluding RAMS) of 2 per cent, business loan growth of 3 per cent, and institutional loan growth of 6 per cent.
Its total Australian mortgage portfolio ticked up to over $508.3 billion, with broker originations for the group rising to 52.7 per cent in the quarter, up from 49.8 per cent in the December 2023 quarter.
It continues the rising trajectory of broker flows, with brokers originations growing from 51.8 per cent of the group’s entire portfolio in the September 2024 quarter and just over 50 per cent in the March 2024 quarter.
The vast majority (93 per cent) of the bank’s mortgages were variable rate loans and 68 per cent is for owner-occupier loans.
First home buyer (FHB) activity also increased over the December quarter, with FHBs making up 12.2 per cent of the portfolio balance, up from 11.8 per cent in September and 11.3 per cent in the March quarter.
The average loan size also rose, increasing to $325,000 (up 5 per cent in the six months from March).
[Related: Westpac broker flows reach over 60% in 1H24]
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