Mozo Money Moves: RBA holds steady, as Big Four rate and fee increases on credit cards “fly under the radar”

Welcome back to Mozo Money Moves, your weekly personal finance wrap that looks at changes to rates, fees and conditions in the Australian banking industry.

This week, we look at the latest central bank’s cash rate decision, a new Home Loan report from Mozo, and the movement in fees and rates in the credit card market that have been “flying under the radar.”

RBA Moves

The Reserve Bank of Australia (RBA) held the cash rate at 4.35% on Tuesday, giving borrowers more reassurance the RBA has reached the peak of the hiking cycle. 

Mozo’s personal finance expert Rachel Wastell says there have been some interesting shifts in the RBA statement as to the next rate move, and she’s “almost positive” the next cash rate move will be a cut.

“In February, the RBA hinted at the possibility of future rate hikes, but in their March statement they didn't mention anything about raising rates. It seems they're taking a wait-and-see approach, especially with inflation still stubbornly high, but it’s unlikely they’ll hike again.”

“The RBA noted on Tuesday that inflation in services  is still running high, but unemployment data released on Thursday showed a drop in the jobless rate, so now it seems the market is split as to the timing of the first rate cut.”

“While this unemployment figure is important, the equation is tricky, as we’ve had record numbers of people coming in which impacts those high level numbers we’re seeing.”

Wastell explains that with all the uncertainties in the global economy the central bank is most likely being cautious.

“New RBA governor Michele Bullock probably won't give the media too much forward guidance as we enter the cutting cycle, to avoid the risk of misleading stressed borrowers with "false hope" of early rate cuts as previous governor Lowe did.”

While the Big Four bank’s predictions on when interest rates will come down vary, they generally anticipate the first cut to come around September or December this year, reaching roughly 3% by the end of 2025. The Commonwealth Bank is the most optimistic of the four, predicting the cash rate will drop to 2.85% by June 2025.

Caption under table - Data accurate as at 14 March 2024.

“Looking ahead, I think we could potentially see a rate cut mid-year, unless there's a significant surprise in inflation figures,” Wastell says.

“It's definitely going to be an interesting few months ahead as we see how things unfold.”

Mozo RBA Insights

• The Reserve Bank of Australia (RBA) again held the cash rate at 4.35% this week, and the market consensus seems to be that the next move is a cut.
• Predictions from the Big Four Banks typically point to September or December this year for the first cash rate cut after 13 rate hikes.
• The Aussie mortgage market has changed significantly over the past two years, here’s how lenders have moved rates in response to the RBA moves.

Home Loan Moves

This week, fixed rate cuts and variable rate increases continued across the Mozo database, with slight adjustments here and there, but as we mentioned last week, that focus still remains on fixed rate cuts. The Big Four are still yet to cut fixed rates, so Mozo is keeping a keen eye on this space.

Mozo also unveiled its 2024 Home Loan Report on Sunrise this week, shining a light on the unsung heroes of the home loan market, and revealing six home loan hacks for borrowers looking to save money on their repayments.

Mozo’s “Home Loan Hacks & Unsung Heroes” report found that while 75% of Aussie mortgage holders are openly concerned about their repayments, 42% don’t know their interest rate*.

“After one of the most aggressive rate hiking cycles since the early 1990s, Aussies are finding it difficult to stay on top of the changes, with 2 in 5 admitting they don’t know their home loan rate.”

“Some Aussies are paying upwards of a thousand dollars more a month to cover their mortgage, but more than half are unaware of key home loan features that could save them thousands of dollars,” Wastell says.

For example, Mozo found that switching to one of the “unsung heroes of home loans” (aka the winners of the Mozo Experts Choice Awards for Home Loans) from a Big Four bank average variable rate, could result in monthly savings of around $436, which is over $5,000 a year^.

The report also highlights how halving your monthly repayment in two and paying fortnightly could save borrowers $111,050 in interest over a 25-year loan term. 

"The rise in interest rates may be hitting homeowners hard, but there are ways to ease the burden, and that starts with understanding your loan and knowing your rate."

Mozo research* shows mortgage holders who compare their interest rate every six months are paying $118 less each month compared to those borrowers who haven’t compared since getting their home loan.

Mozo Home Loan Insights:

• Newer home loan providers are helping customers to save in ways that other banks currently don’t. Mozo Director Kylie Moss has the latest.
• Mozo found that 42% of mortgage holders don’t know their home loan rate, but they could save thousands with these six key home loan hacks.
• Despite the latest statistics showing 1 in 4 homes were bought with cash in 2023, home loans are still crucial for many Aussie buyers, here’s why.

Credit Card Moves

”Over the past few months, banks have been hiking fees and rates, and reducing rewards offers, on a number of different credit card products,” Wastell explains. 

“Surprisingly, these moves in the credit card market have been “flying under the radar” but Mozo data shows they’re coming in thick and fast from a number of lenders, including the Big Four banks.”

ANZ has increased purchase rates by 0.5% p.a. to 20.99% p.a. across a range of cards, and NAB raised purchase rates by 1.00% p.a. to 20.99% p.a.for Rewards cards and 13.49% p.a. for the Low Rate card. 

The Commonwealth Bank hiked monthly fees on its BNPL style Neo cards, and announced they will be reducing the number of interest free days on some cards from 55 days to 44 days on Awards cards, effective 1 May 2024.

The Commonwealth Bank also increased its credit card purchase rates in November 2023 by 0.75% to 1.25% p.a. across all cards, with the majority now at 20.99% p.a. and the Low Rate card at 13.99% p.a..

This month Westpac did seemingly make some positive moves, offering fee waivers or discounts for existing customers who opt for a new Westpac credit card. However shortly after, they announced further credit card rate increases that will go into effect mid-year.

The purchase rates will increase to 20.99% p.a. and cash advance rates to 21.99% p.a. across a range of credit cards, effective from 20 June 2024. 

“Westpac, NAB and ANZ have all shifted credit card purchase rates up to meet the November move by the Commonwealth bank,” Wastell says.

“After 20 June 2024, all big four banks will be charging purchase rates of 20.99% per annum.”

Lowest Rate Credit Cards

Mozo Credit Card Insights:

• If you're one of the many Aussies with a Westpac credit card in your wallet, here's what you need to know about upcoming rate changes.
• Mozo has rounded up seven of the most common mistakes people make with credit cards, so you avoid making them.
• Credit card rewards points can be confusing but there’s a fairly simple equation you can follow that will calculate the rewards points currency.
• The amount of interest-free days you have on a credit card is determined by when you make a purchase, here’s how it works.

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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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Disclaimer: Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice. Target Market Determinations can be found on the provider's website. While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo. 

*Mozo.com.au commissioned a nationally representative consumer research survey via Researchify, surveying 2,554 Australians, aged 18 years and over, from 12th January to 2nd February 2024

^Based On Average Big Four Rate Of 7.48%P.A. Vs Average  Winners Rate Of 6.10%P.A. On A $500k Owner Occupier Loan, 80% Lvr, Principal & Interest, 25 Year Term. Accurate as at 13 March 2024.