Westpac steps out of line with a 10 basis points cut to its 2-year fixed home loan rate. Although not a large drop, it is the first non-trivial reduction in a main bank 2-year rate for six months

It is just 19 days until spring. And those involved in the 'sales' end of the housing market will be hoping it heralds more transaction activity.

Banks have often heralded spring with mortgage rate trims - 'specials' that are designed to rekindle interest.

Home loan rates have remained relatively static over the past month. But today (Monday), Westpac has dipped its toe in the water with one change, dropping their key two year fixed rate by 10 basis points (bps) to 6.69%.

This is the lowest of any main bank who are otherwise all on 6.79% for a fixed two year term.

And the Westpac exception is in addition to their exceptional fixed five year rate, which remain unique at 5.99%. In fact, unique among all banks including challenger banks (and the only sub-6% rate for any term).

Among challenger banks, the lowest two year fixed rate is still from both Heartland Bank and ICBC at 6.45%. Bank of China at 6.59% is the only other bank with a rate lower than the new Westpac one.

Over the past four weeks, the two year wholesale swap rate has held pretty stable at 5.50%, so this benchmark is not what has allowed Westpac to make its latest trim.

And the Reserve Bank isn't expected to change the Official Cash Rate at its Monetary Policy review on Wednesday. That rate may be on hold also, at 5.50% for a few meetings yet, at least until after the election.

In a stable money market situation, Westpac's cut suggests it is an early shot at the initiative for the upcoming spring home buying/selling season.

Obviously you should negotiate and shop around. Westpac's move will give you some leverage. Most banks will discount their carded 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.

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.

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 August 14, 2023	%	%	%	%	%	%	%
ANZ	7.19	7.19	6.89	6.79	6.49	6.89	6.89
	7.25	7.25	6.95	6.79	6.49	6.39	6.29
	7.39	7.19	6.95	6.79	6.49	6.49	6.49
	7.15	6.99		6.79	6.49	6.29	6.29
	7.19	7.19	6.95	6.69 -0.10	6.49	6.29	5.99
Bank of China		6.89	6.79	6.59	6.29	6.19	6.09
China Construction Bank	7.19	7.09	6.89	6.75	6.45	6.40	6.40
Co-operative Bank [*FHB special]	6.99	6.79* +0.10	6.89 +0.10	6.75	6.49	6.49	6.49
Heartland Bank		6.59	6.59	6.45	6.15
HSBC	7.19
ICBC	6.95	6.79	6.65	6.45	6.29	6.29	6.19
	7.19	7.19	6.95	6.74	6.29	6.59	6.69
	6.99	7.19 +0.20	6.99 +0.10	6.79	6.49	6.49 +0.10	6.49 +0.20