Mozo Rate Chaser mid-month update – February 2012
The Mozo Rate Chasers breathed a sigh of relief when the RBA announced that it wouldn’t move the official cash rate at its February meeting, thinking that we would have a fairly unexciting month of crossing the t’s and dotting the i’s of all the products we cover. We couldn’t have been more wrong with ten lenders having announced rate increases at the time of writing.
The big 4 are certainly living up to their bad reputations with all of them increasing variable home loan rates outside the usual RBA rate changes, citing the pressures of increased funding costs. Just don’t mention that they are all also in the middle of reporting record mid-year profits!
|Bank……….||Old Rate…..||New Rate…..||Increase…..||Cost…..|
*Based on $300,000 loan balance repaid over 25 years
While some other lenders are playing follow the leader, (such as Bankwest, Bendigo, Greater Building Society, St.George) and bumping up their rates, there are still plenty who haven’t. The best in the market currently is My Mortgage Freedom’s 6.10% variable rate and there are a range of lenders around the 6.2% mark.
Compared with the average big 4 standard variable rate, a borrower could reduce their repayments by up to $244 per month and save almost $73,000 over the life of a 25 year $300,000 loan by switching to the cheapest rate. Even compared with the big banks’ relatively attractive package rates, the same loan could save $117 per month and almost $35,000 over the life of the loan.
Savings versus Home loan rates
The Australian Bankers’ Association said in a recent media release that around 60% of the money that local banks lend to consumers comes from bank deposits. We’ve compared what the banks have done with their prime savings accounts compared to their home loan rates since the RBA started moving the cash rate back in November last year.
ANZ is giving people with savings the best deal, both in terms of having the best rate on the market at 5.76%, down only 0.25% when they have cut their mortgage rates by 0.44% over the same period. NAB gets a commendable mention for only reducing their savings rate 0.3% when they have cut their home loan rates a total of 0.36%. They couldn’t afford to take too much off their savings rate though as it is the worst of the big 4 at only 4.46%.
CBA and Westpac have both slashed deposit rates more than their home loan rates which will deliver a nice little boost to their bottom lines. Both have reduced their home loan rates a total of 0.4% but their deposit customers are earning 0.5% less interest on their savings, now receiving 5.50%.
The savings account rates quoted here are the best ongoing rates from each bank, although they all have deposit and/or withdrawal conditions that must be met each month to earn the top rate.