The Choices Offset loan, was launched without much fanfare, but has attracted quite a bit of attention.
The product is priced at 5.69%, which is between Kiwibank's new rate of 5.25% and BNZ's Total Money rate of 5.74%.
Westpac's product is not too much different to the others in the market and it allows up to 10 accounts to be tied to one home loan, so the interest earned on the money in the other accounts is used to offset the loan interest charge.
Westpac general manager retail Ian Blair said it was a solution for customers that offered them control and flexibility as well as the ability to pay down their loans more quickly.
Blair said the bank had got the product to market as quickly as it could because it wanted to provide a full suite of solutions for customers depending on their needs. “It was trialled for a short period before the launch and was really well received.”
“It gives a good degree of flexibility, rather than moving money in and out of a mortgage," he said.
Some commentators had previously said that offset products would be less appealing once floating rates rose but Blair said a higher interest rate environment could mean more tax savings for a borrower with an offset loan.
Westpac will be the only bank offering an offset loan through brokers.
