3 quick takeaways from the ACCC interim report on home loan pricing

The Australian Competition and Consumer Commission (ACCC) has this afternoon released an interim report into home loan pricing by Australia’s big four banks.
In late 2019, the ACCC was tasked by the Federal Treasurer, Josh Frydenberg, to launch an inquiry into the home loan market with a specific focus on the price differences paid between new and existing customers and the reaction of lenders to Reserve Bank interest rate cuts.
The Home Loan Price Inquiry interim report focused on Australia’s big four banks which account for the majority (around 80%) of the home loan market share, taking into account home loan prices between January 2019 and October 2019.
Here are some of the major takeaways of the report:
Profitability is - surprise, surprise - a ‘key consideration’ for banks
It won’t come as a surprise, but the ACCC’s interim report has suggested that banks placed a high priority on ensuring their profitability. Perhaps at the expense of not passing on recent RBA rate cuts on in full to their mortgage customers.
According to ACCC Chair, Rod Sims, the big banks have been trying to “shore up” their profitability, but in a low rate environment where their savings account rates have moved close to zero, that has meant not always passing on cuts to borrowers in full.
“It was their strong preference, after the RBA’s cuts, not to further reduce the rates customers were earning on some deposit products as they approached zero per cent,” he said in a statement released this afternoon.
“The banks’ reluctance to cut these deposit rates led them to anticipate lower profits, which they aimed to recover by not always fully passing through cash rate cuts to their mortgage customers.”
There’s a big old gap between headline and discounted rates
If you’re not getting a discounted rate on your home loan, you’re missing out.
That was another one of the key takeaways from the interim report, with the ACCC finding an average gap of 123 to 131 basis points - depending on the bank - between the average owner occupier rate (principal and interest repayments) and the variable headline rate.
According to the interim report, 89% of home loan customers with the big four banks were receiving at least some kind of discount on their mortgage, while 11% remained on the higher headline rate.
Meanwhile, around 13% of customers were getting a discount of 150 basis points or more (as of October, 2019).
Loyalty doesn’t pay
It’s the age old question and the ACCC interim report has a pretty clear answer: no.
The report found that (as of September 2019), new customers had a home loan with a rate 26 basis points lower on average than customers with an existing home loan.
The figure rose in line with customer loyalty, given that customers with a loan five years old were found to be paying an average of 40 basis points above what a new customer with one of the big four banks was paying.
As a result, the ACCC has encouraged mortgage customers to shop around because, as Rod Sims suggests, even a small interest rate reduction could make a substantial difference.
“Given the economic disruption, uncertainty and job losses stemming from the COVID-19 pandemic, many consumers may not be inclined to shop around and ask for discounts from their banks right now.”
“However, our analysis shows how that even a small further reduction in interest rates could potentially save thousands of dollars over the life of a mortgage. Consumers should consider this carefully when it is time to re-engage with their lender.”
RELATED: Reluctance to haggle could cost Aussies $6k in household expenses, Mozo research finds
The final report is scheduled to be released later on in the year and will delve into more detail about some impediments Australian customers face when it comes to refinancing their home loans or switching to a different lender.
In the meantime, if switching is on your mind check out our refinancing tips and tricks, or head on over to the Mozo home loan comparison hub to check out up to date rates from a range of lenders.
Home loans 2020 - last updated 16 May 2022
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Smart Booster Home Loan
2 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR
interest rate
comparison rate
Initial monthly repayment1.85% p.a.variable for 24 months and then 2.25% p.a. variable2.21% p.a.New super low introductory rate home loan for two years. Min 20% deposit. No monthly or ongoing fees. Fast settlement times. Mozo award-winning online lender. Friendly, local Australian based team.
CompareCompareSmart Booster Home Loan
New super low introductory rate home loan for two years. Min 20% deposit. No monthly or ongoing fees. Fast settlement times. Mozo award-winning online lender. Friendly, local Australian based team.
- interest rate
- 1.85% p.a.variable for 24 months and then 2.25% p.a. variable
- comparison rate
- 2.21% p.a.
- interest rate
- 1.85% p.a.variable for 24 months and then 2.25% p.a. variable
- comparison rate
- 2.21% p.a.
- Upfront fees
- $520
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- Optional - with 0.10% additional interest
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $1,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
Read our Mozo Review to learn more about the Smart Booster Home Loan
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Celebrate Variable Home Loan
<60% LVR, Owner Occupier, Principal & Interest
interest rate
comparison rate
Initial monthly repayment2.14% p.a. variable2.14% p.a.Rates have moved in line with RBA. Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required.
CompareCompareCelebrate Variable Home Loan
Rates have moved in line with RBA. Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required.
- interest rate
- 2.14% p.a. variable
- comparison rate
- 2.14% p.a.
- interest rate
- 2.14% p.a. variable
- comparison rate
- 2.14% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $100,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
Read our Mozo Review to learn more about the Celebrate Variable Home Loan
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Basic Home Loan
Owner Occupier, LVR<60%, Principal & Interest
interest rate
comparison rate
Initial monthly repayment2.39% p.a. variable2.39% p.a.Competitive low variable rate. No application or account management fees. Flexibility to split your loan and set different repayment types. Fee free withdrawals of your savings.
CompareCompareBasic Home Loan
Competitive low variable rate. No application or account management fees. Flexibility to split your loan and set different repayment types. Fee free withdrawals of your savings.
- interest rate
- 2.39% p.a. variable
- comparison rate
- 2.39% p.a.
- interest rate
- 2.39% p.a. variable
- comparison rate
- 2.39% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $400.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $5,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
Read our Mozo Review to learn more about the Basic Home Loan
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Mozo experts choice awards won:
- Low Cost Home Loan - 2022
Variable Rate Home Loan
Owner Occupier, Principal & Interest, LVR <80%
interest rate
comparison rate
Initial monthly repayment2.09% p.a. variable1.99% p.a.$5000 refinance cashback. Owner-occupier refinancers only living in NSW/VIC/SA metro and inner regional areas. Receive up to an additional 0.15% off your rate as you pay off the loan. Receive bonus payments up to $2,500. T&Cs apply.
CompareCompareVariable Rate Home Loan
$5000 refinance cashback. Owner-occupier refinancers only living in NSW/VIC/SA metro and inner regional areas. Receive up to an additional 0.15% off your rate as you pay off the loan. Receive bonus payments up to $2,500. T&Cs apply.
- interest rate
- 2.09% p.a. variable
- comparison rate
- 1.99% p.a.
- interest rate
- 2.09% p.a. variable
- comparison rate
- 1.99% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- no
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $20,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Fortnightly, Monthly
- Special Offers
- Receive $5000 cashback for Owner Occupier Refinancers only in eligible areas only.
Read our Mozo Review to learn more about the Variable Rate Home Loan
-
Mozo experts choice awards won:
- Best New Home Loan - 2022
- Low Cost Home Loan - 2022
Variable Home Loan
Owner Occupier, Principal & Interest
interest rate
comparison rate
Initial monthly repayment1.99% p.a. variable1.99% p.a.Purchase and Refinance. No upfront or ongoing fees. Fast digital application. 100% offset sub account with no account or redraw fees. Comes with a Visa debit card, mobile App, and digital wallet. 20% deposit or equity required. Mozo Experts Choice winner for Best New Home Loan and Low Cost Home Loan 2022. 18 years and over.
CompareCompareVariable Home Loan
Purchase and Refinance. No upfront or ongoing fees. Fast digital application. 100% offset sub account with no account or redraw fees. Comes with a Visa debit card, mobile App, and digital wallet. 20% deposit or equity required. Mozo Experts Choice winner for Best New Home Loan and Low Cost Home Loan 2022. 18 years and over.
- interest rate
- 1.99% p.a. variable
- comparison rate
- 1.99% p.a.
- interest rate
- 1.99% p.a. variable
- comparison rate
- 1.99% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes - offset sub account
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $100,000
- maximum borrowing amount
- $2,500,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
Read our Mozo Review to learn more about the Variable Home Loan
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
^See information about the Mozo Experts Choice Home Loan Awards
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