Westpac is raising variable rates on its interest-only mortgages by another 0.34 percentage points as it tries to slow down riskier lending to stay within regulatory limits.
The lender will also drop variable rates on principal and interest home loans by 0.08 percentage points from June 30, hoping to entice borrowers to move their loans across.
Westpac Consumer Bank chief executive George Frazis said the move was not a response to the federal government's bank levy, but to ensure interest-only lending remained within the limit imposed in March by the Australian Prudential Regulation Authority.
"APRA's limit on new interest-only lending is 30 per cent of new residential mortgage lending, so we have to continue to make changes to our interest only rates and lending policies to meet this benchmark," Mr Frazis said in a statement.
Westpac's standard variable rate for customers paying principal and interest on owner-occupier mortgages will come down to 5.24 per cent.
Its interest-only owner-occupier rate will rise to 5.83 per cent, with the interest-only investor rate at 6.3 per cent.
Variable rates at Westpac subsidiary St George will move by similar amounts.
Rival ANZ adapted its rates mix along similar lines almost two weeks ago.
