This month in banking - Home loans expensive, but term deposits more lucrative

A hand swipe a credit card on a reader against a yellow circle on a pink and blue background (not dissimilar from the Bi pride flag).

We’re back with Mozo’s Monthly Banking Roundup; let’s unpack the latest news.

Quick facts:

  • Major fixed rate hikes made by 57 out of 90 lenders in Mozo’s database
  • Variable interest rates saw mostly cuts (except from four lenders)
  • MoneyMe offers betters credit card interest rates to customers with higher credit scores

Fixed rates rising for home loans while variable interest rates see cuts

A blue cartoon house rises on a increasing line on a blue background.

In Mozo’s database, the number of fixed rate home loan offers under 2% is rapidly dwindling. Out of the 90 lenders tracked by Mozo, 57 increased some or all of their fixed interest rates in March. 

Major banks are among the offenders, including NAB and CBA. This takes the 3-year average up 28bp to 3.54% and the 5-year average up 32bp to 4.08%. 

RELATED: Why are fixed rates going up right now?

Amidst speculation that the Reserve Bank of Australia (RBA) will lift the cash rate as early as June, many banks have been scrambling to push up fixed-rates on home loans back to pre-pandemic levels. Experts believe that this move may slow down the red-hot housing market and cool house prices by as much as -10% in 2023.

To incentivise new buyers, lenders have also been making cuts across their variable interest rates in March (a total of 13 cuts). However, not everyone has joined the trend, as Firstmac (40bp), Suncorp (4-10bp), Teachers Mutual Bank (20bp), and Virgin Money (5bp) have all hiked variable rates for at least one borrower type. 

With a higher RBA cash rate looming on the horizon, Mozo spokesperson Tom Godfrey reckons we’ll see many more variable rate increases (alongside the fixed rate ones). This could point to mortgage stress for customers in the future.

“With three of the big four banks hiking their fixed rates again last month,” says Godfrey, “the writing is on the wall that a rate rise is coming.”

Savings accounts and term deposits becoming more lucrative

A higher RBA cash rate may be bad news for home loans, but it’s great news for savers, who’ve been somewhat hung out to dry with middling returns in recent years. 

Across Mozo’s database, there were 139 term deposit rate increases and 26 cuts last month. The average increase was 35bp across all terms.

This means that term deposit rates finally exceeded 2-3% for the first time since the pandemic started. The highest interest rate in our database is now 3.10% for 5-year terms – a staggering 115bp jump. 

RELATED: Trying to save money? Choosing the best high interest savings account in 2022

Competition for young savers is heating up among the banks. Bank of Queensland (BOQ) have just launched Future Saver for customers between 14-35 years old, with a bonus interest rate of 2.00% up to $50,000.

Enjoying a high credit score? MoneyMe has better credit interest rates to offer you

MoneyMe updated the rate structure last month for its Freestyle Virtual Mastercard, widening the range of interest rates down to as low as 14.99% (high end of 19.99%) depending on your credit score.

This special offer is a great reminder to get proactive about your finances and improve your credit score, says Godfrey. Especially in the face of the rising cost of living, it’s critical to pay your bills on time and manage your monthly spend. 

RELATED: How do I switch my credit card?

Looking to save? Compare term deposits on offer below.

Compare term deposits

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 102 term deposits.
Last updated 11 September 2024 Important disclosures
  • Mozo Expert Choice Badge
    Term Deposit

    5.00% p.a.
    6 months

    $1,000

    Yes up to $250,000

    Great rates and incentives incl. 0.10% added loyalty bonus at renewal. Option to have interest paid to another bank. Winner of the Mozo Experts Choice Awards 2024^ for Term Deposits.

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    Details
  • SMSF Term Deposit

    4.95% p.a.
    11 months

    $100,000

    Yes up to $250,000

    Invest your funds in a Beyond Bank Self-Managed Super Fund (SMSF) Term Deposit. Competitive fixed rates. Keep your savings securely locked away and backed by the Government Guarantee. Only available for balances greater than $100,000.

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    Details
  • Mozo Expert Choice Badge
    Term Deposit

    4.65% p.a.
    7 months

    $10,000

    Yes up to $250,000

    Minimum $10,000 deposit. No account keeping fees. Terms from 3 months up to 2 years. Interest can be paid into a different bank. Balances up to $250,000 are guaranteed by the Australian Government. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^

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    Details
  • SMSF Term Deposit

    5.00% p.a.
    6 months

    $1,000

    Yes up to $250,000

    Apply digitally in minutes and manage your SMSF Term Deposit. Flexible cash flow management with three interest payment frequencies that suit you: monthly, yearly, or at maturity. Choose from terms of 3 months up to 5 years. No application or monthly account fees but eligibility criteria and terms and conditions apply. Only accessible to SMSFs with two or up to four individual trustees or one corporate trustee.

    Compare
    Details
  • Mozo Expert Choice Badge
    Term Deposit

    5.05% p.a.
    9 months

    $25,000

    Yes up to $250,000

    Enjoy flexible terms starting from 31 days up to 5 years with a Heartland Bank Term Deposit. Get your interest paid monthly (on selected terms). Your savings are protected by the Government guarantee. Minimum deposit amount of $25,000 up to $1,000,000.

    Compare
    Details

* Different interest rates apply to different amounts or different interest payment frequencies.

^See information about the Mozo Experts Choice Term Deposit Awards

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