Mozo Money Moves: Banks cut fixed rates, savings rates and variable rates, as home loan focus shifts to investors.

After a short hiatus, Mozo Money Moves is back to wrap up the latest in personal finance, looking at the key changes made to rates, fees, offers and conditions. 

This week, we’ll dive into the Home Loans and Savings changes in the February 2024 Mozo Banking Roundup, and discuss the shift in the market that suggests investors are a new hot commodity, and RBA rate cuts are on the horizon.

Home Loan Moves

• Variable rates were both hiked and cut, as some smaller lenders made significant reductions to stand out from the crowd.
• Fixed rates trended downwards, with many lenders reducing rates across various loan terms, with a focus on the 3-year terms.

Variable Rate Moves

"Looking back on February, there have been several variable rate cuts from smaller lenders despite an RBA cash rate pause” says Rachel Wastell, Mozo's personal finance expert.

“While the Mortgage Wars between the big banks may be over, challengers and online lenders are still making cuts to stand out from the crowd, this is especially true when it comes to the variable rate investor and high LVR loans.”

Today, ABS Lending Indicators data showed that despite a monthly drop in the number of new investor loans in January (-2.6%), overall there has been substantial growth in this market. In the year to January 2024, new investment loan commitments increased by 18.5%.

On the Mozo database over the past few months, there have been several banks including ING, Greater Bank and Macquarie cutting variable rates for investors. 

This aligns with the idea that some banks are shifting focus to investors for new loan commitments, and cuts from Greater Bank (0.15%) and The Mutual Bank (0.20%) have pushed these lenders into the top 5 lowest rate tables.

Lowest Variable Rates (Owner Occupier)

Lowest Variable Rates (Investor)

Fixed Rate Moves

“On the fixed-rate home loans front, cuts from institutions like Macquarie and HSBC suggested confidence in a 2024 RBA rate cut is growing,” Wastell continued. 

“In February, many lenders slashed rates across various terms and that has continued into the first week of March. Notably, lenders focused on making 3-year fixed terms the most competitive option, as banks attempt to lock in customers in the face of looming RBA rate cuts.” 

“Therefore, it is likely the banks believe in three years the cash rate will be significantly lower than it is now.”

Major banks maintained their fixed rates, and the Big Four are still yet to move, so Mozo experts are watching NAB, CBA, Westpac and ANZ rates closely. 

In February, 31 lenders reduced fixed options, and another 7 lenders (Australian Military Bank, firstmac, Heritage Bank, loans.com.au, Mortgage House, Police Credit Union and Yard) have cut rates in the past seven days. 

Fixed rates below 6% are becoming increasingly common for both owner occupier loans and investor loans across all LVRs. As at 7 March 2024, 92 options for 3-year fixed rate home loans boast rates under 6. 

Lowest Fixed Rates (Owner Occupier)

1 Year Fixed Rate

3 Year Fixed Rate

Lowest Fixed Rates (Investor)

1 Year Fixed Rate

3 Year Fixed Rate

Mozo Home Loan Insights:

• Offset accounts are lauded as one of the go-to tools for people who want to save money on their home loan, but do you need 50 of them? Money writer Jack Dona looks into the latest home loan offer from Up.
• Looking for a smaller home loan? Managing Editor Jp Pelosi shares insights into where you can buy regional property for less than $650,000.
• Mozo Director Kylie Moss explains how Aussie borrowers looking for lower home loan rates could find looking beyond the big banks has its benefits.
• New data suggests there’s positive momentum before the usually busy autumn selling season, so if you want to make an offer early, here’s how.

Savings Moves

• Savings rates experienced some cuts across the board, as the Bonus Rate Leader was replaced, and a credit union increased rates by more than 2%.
• Term deposit rates generally declined, although one major bank did increase their one-year rate, two of the big four banks made cuts.

‘At Call’ Savings Account Moves

In February, ‘at-call’ savings rates experienced a mixed trend, with hikes and cuts across the board. However, despite some cuts to some of the highest rates on the market, they remain some of the more competitive offerings. 

AMP Bank raised its ongoing bonus rate by 20 bps, Orange Credit Union increased its unconditional rate by a whopping 225 bps, and Auswide Bank introduced an introductory bonus rate of 5.00% p.a. for the first three months on its Online Saver. 

HSBC, Macquarie Bank, MOVE Bank and Unity Bank all decreased bonus rates between 15 - 25 bps, which led to a new Bonus Rate leader in ME Bank’s Home ME Savings account. Notably, the four major banks did not make any changes to their savings rates.

For savers, the key is to determine whether you can meet the conditions of your bonus account each month, or whether you would benefit more from a slightly lower base savings rate that you will earn regardless of meeting any set conditions.

Term Deposit Rate Moves

“Term deposit rates have been on a downward trend since the market conceded that we have reached the cash rate peak,” explained Wastell. 

The monthly CPI indicator for January (3.4%) showed inflation is sitting close to the RBA’s target range of 2-3%, and that is leading banks to reduce rates for longer-term deposits.

“ANZ, Commonwealth Bank, Judo Bank, NAB, Rabobank, and Westpac all cut their term deposit rates, most likely to mitigate risk in light of expected 2024 cash rate cuts.”

“With more reductions than increases observed, especially for terms of one year or longer, it was notable that HSBC increased its one-year rate, perhaps to attract new deposit business.”

Other banks like Greater Bank had a mixed bag of term deposit rate changes, reducing interest rates for term deposits up to 11 months and cutting rates for longer terms. 

Highest Term Deposit Rates

1 Year Term Deposits

2 Year Term Deposits

Mozo Savings Insights:

• Have you found your savings pool exhausted? Here are five key savings strategies that can help you build up your cash pile, fast.
• Wondering how much money you need to deposit every month to get the best interest rate for your savings? Find out here.
• Money writer Cameron Thomson shares all the details about which banks cut savings rates in February, and introduces the new rate leader.
• Gabriella Margerison has shared the four money mantras for March to align you with your goals and inspire better money habits.

Next week, we’ll dive into what happened in the personal loan space in February, and discuss our predictions for the upcoming RBA cash rate meeting on the 18-19th March.

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As a part of Mozo’s commitment to making your money count for more, each month we “roundup” the rate changes, key banking trends and money moves in the Australian personal finance market. 

If you’d like to see the analysis in full once it’s released, you can subscribe to receive the Mozo Banking Round Up here.

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