9 Dec 2013

Bank varies mortgage rates according to deposit

1:12 pm on 9 December 2013

Westpac Bank has started charging higher interest rates on mortgages to people who have less than a 20% deposit.

Retail bank general manager Ian Blair says the differential pricing is in response to the Reserve Bank restrictions on bank lending to people with small deposits which came into effect in October.

The bank says it has dropped its floating mortgage rate to 5.64% for people with more than a 20% deposit, but those with less will have to pay 6.24% - Westpac's previous floating rate for all borrowers.

For fixed mortgages, borrowers with less than a 20% deposit will pay 6.55% interest for two-year mortgages compared with the 5.59% fixed mortgage rate offered to those with larger deposits.