Mozo Money Moves: Term Deposit and Fixed Rates tumble as we reach the cash rate peak

This week, Mozo released its bumper first edition of the Mozo Banking Roundup for 2024, which looked at the trends and rate moves across key personal finance products in December 2023 and January 2024.

The long-awaited quarterly CPI data was also released, which showed that inflation is now at 4.1%, a far cry from the 7.8% peak back in December 2022.

“With CPI data released this week showing inflation is easing, it looks like we're on our way to navigating that 'narrow path' to a 'soft landing' the RBA is after,” said Mozo personal finance expert Rachel Wastell.

“The rate adjustments we’ve seen on the Mozo database also indicate a rate cut is most likely the RBA's next move, with major banks cutting fixed rates across the board and shorter-term rates on term deposit accounts.”

Home Loan Moves

Variable Rate Moves

The review of the past two months showed that as the mortgage wars come to an end, more lenders are opting for variable rate hikes over cuts and cashback offers are being withdrawn. 

ANZ raised Simplicity PLUS rates by 10 basis points, Australian Mutual Bank increased variable rates by 20 basis points and Auswide Bank made two consecutive rate hikes, with basic and offset rates now 10-15 basis points higher. 

ING raised both basic and offset loans by 5 basis points and P&N Bank, Unloan and Up also increased some variable rates by 15 to 25 basis points.

Notably, Macquarie initially increased rates by 10 basis points in December but then reduced them by 9 to 21 basis points in January. 

Lowest Variable Rates

Cashback Moves

In regard to the withdrawal of cashback offers, Mozo noted that four banks had removed offers from the market. 

These were the Mutual Bank's $2,500 cashback, Defence Bank's $4,000 cashback, Heritage Bank's first-year package fee waiver, IMB Bank's $3,000 cashback, and RACQ Bank's $2,000 cashback.

Fixed Rate Moves

While variable rates have been experiencing hikes, the opposite is occuring in the fixed rate space. 

AMP Bank decreased rates by 10 to 40 basis points, Bank Australia cut by 10 to 20 basis points and Bank of Queensland implemented substantial cuts, ranging from 30 to 76 basis points. Bendigo Bank, Beyond Bank, MyState Bank and Great Southern Bank also lowered fixed rates by 10 to 55 basis points. 

But it’s not just the small banks making moves. 

Macquarie cut its fixed rates by 20 to 46 basis points  and HSBC cut fixed rates across several terms, some up to 80 basis points.

“There seems to be a sense of confidence emerging from banks that the RBA has come to the end of its aggressive hiking cycle," Wastell continued.

“Lenders have been cutting fixed rates across most terms, and at the tail end of this week as February begins we’ve seen a significant growth in the number and size of these cuts.”

“In fact, yesterday HSBC cut some fixed rate terms up by to 0.80%.”

Lowest Fixed Rates

Mozo Insights:

• With the RBA meeting for the first time in 2024 next Tuesday, what are markets predicting? Will they hold the cash rate at 4.35%?
• The market seems to have shifted in recent week, and money writer Evlin Dubose dives into the details with February’s Home Loan Snapshot
• As property prices rise, its begs the question; are first home buyers still turning to the Bank of Mum and Dad to get a foot on the property ladder?
• Macquarie cut variable rates a week before the RBA decision, so what rates did they cut and how much by?

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Savings & Term Deposit Moves

As the trend of the cash rate now looks to be down, the ‘At Call’ Deposit sector (savings accounts) has experienced a slowdown in rate changes, but they’re still occurring. 

These changes on savings rates occurred primarily in December as providers caught up with the November cash rate increase.

Bank of us, Easy Street, QBank, Regional Australia Bank, and ubank increased their rates, with adjustments ranging between 10 and 125 basis points. Meanwhile, Australian Unity reduced its Freedom Saver's rate to 5.20% p.a., MOVE Bank adjusted rates on its Online Saver and Growth Saver, and QBANK lowered its Bonus Saver rate by 25 basis points to 5.00% p.a.

Interest rate cuts across term deposits are interesting to watch, with banks favouring reductions on shorter terms, reflecting the consensus we have reached the cash rate peak.

This trend has been reinforced by rate cuts on term deposits from all of the four major banks, with ANZ, CBA, NAB, and Westpac all cutting their 1-year term deposit rates by 5 to 30 basis points.

Big Four Term Deposit Moves

Some banks interestingly made both cuts and hikes depending on the terms. G&C Mutual Bank raised its 9-month and 1-year rates by 20-35 basis points, but reduced the 3-year rate by 40 basis points. ING lowered its 1-year rate by 30 basis points while making minor adjustments to other terms. 

Judo Bank increased rates for the 3-month and 6-month options in December and then reduced all terms by 5 to 15 basis points in January.

Mozo Insights:

• What is the viral trend known as LOUD budgeting, and could it help you smash your savings goals in 2024? Cameron Thomson explains.
• Have you been budgeting, but not making much progress when it comes to growing your cash? It could be your interest rate.
• Do you have a savings mindset for 2024? Young Aussies have an idea and Mozo’s Managing Editor JP Pelosi helps to break it down.
• There’s several digital players using their app technology to offer a range of cool features for savers. Mozo expert Kylie Moss shares them here.

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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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