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 - last updated 8 December 2023

Search promoted term deposits below or do a full Mozo database search . Advertiser disclosure
  • Online Term Deposit

    5.00% p.a.
    9 months


    Yes up to $250,000

    Enjoy the certainty of a fixed interest rate combined with the convenience of online banking to set up and manage your term deposit at maturity. You can start investing from as little as $1,000 or up to $5,000,000.


* 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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