Mozo Money Moves: ANZ cuts home loans and CommBank deposits tank – a cut is coming but don’t bank on relief.

It was a week of fancy footwork as banks repositioned deposit and home loan products before the Reserve Bank of Australia (RBA) rate call next Tuesday. ANZ sliced fixed rates, only to flip its rate cut forecast hours later — which means all Big Four banks are now betting on a rate cut on Tuesday. 

On the savings side, CommBank cut term deposit rates and pushed its 6 month term into the 2s, but it’s still not far behind its Big Four counterparts. All big four term deposit rates for 6 month terms hover just above 3%p.a. – which is well below the leading rate of 4.50%p.a.

Meanwhile, Mozo’s latest analysis looked at what typically happens once a rate cut lands. History shows banks move fast early on but become less generous as the cycle continues, so next week’s cut could be the last one borrowers can rely on to come through in full.

ANZ makes its move (twice in one day)

ANZ made big moves this week, cutting up to 0.35% off 1 to 5-year fixed home loan rate, and just hours later reversing its rate cut forecast to join the rest of the Big Four in tipping a rate cut next week. 

The move catapulted ANZ into the lead across all fixed rate home loan terms for owner occupier borrowers paying principal and interest across all LVRS and loan amounts when compared to its Big Four rivals. Before the cuts, ANZ was already ahead for:

• 1-year fixed rate home loans at 5.49% p.a. (6.61%p.a. comparison rate*) 
• 2-year fixed rate home loans at 5.39% p.a. (6.61%p.a. comparison rate*) 

But the cuts pushed them further into the lead, and ANZ now offers 5.29%p.a. (6.59%p.a. comparison rate*) and 5.19%p.a. (6.44%p.a. comparison rate*) for 1-year and 2-year terms respectively. 

Further, ANZ has made strategic moves to push the 3 to 5-year fixed rate terms to jump 5 basis points ahead of the previous rate leader, NAB for all of these terms.

• 3-year fixed rate home loans now 5.34%p.a. (6.35% comparison rate*) 
• 4-year fixed rate home loans at 5.74% (6.38% comparison rate*) 
• 5-year fixed rate home loans at 5.74% (6.31% comparison rate*) 

Big Four Lowest Available Fixed Rates

Still not the most competitive.

Despite ANZ’s strong positioning among the core four, it still falls well short of the leading fixed rates in the market, which are offered by challenger banks, customer owned banks and digital lenders. This includes Homeloans360, Pacific Mortgage Group, Hume Bank, Easy Street, BankVic  and Regional Australia Bank.

According to the Mozo database, 18 lenders now offer fixed home loan rates below 5%p.a. and the leading rates for 1 to 3-year fixed rate terms start with a 4 (when looking at owner occupiers, paying principal and interest across all LVRs and loan amounts). For 4 and 5-year fixed rate terms in the same category, leading rates still start with 5, but are making their way down.

“ANZ has gone for precision, cutting just enough to beat NAB across all 1 to 5-year terms and take the fixed rate lead among the Big Four,” says Mozo's personal finance expert Rachel Wastell.

“It’s a clear signal they’re targeting fixed borrowers ahead of the next RBA move, even though their rates still sit well above the sharpest deals in the Mozo database.”

Fixed Home Loan Rate Leaders

Term deposit rates now into the 2s.

With the market now fully pricing in a 25bp RBA cut on Tuesday, we’re seeing the usual pattern – term deposit and fixed home loan rates move first, and banks are repositioning fast.

Today, CommBank cut term deposit rates and some now start with a two. The 6-month rate is down to 2.95%p.a., from 3.10%p.a.

Judo Bank, which had been leading the 6-month table with a 4.55%p.a. rate  also made a cut today, taking it out of the top spot and leaving Heartland and Gateway in the lead with 4.50%p.a. This places the Commonwealth Bank a whopping 155 basis points below the 4.50%p.a. leading rate for those 6 month terms. The other Big Four aren’t far behind, with NAB, ANZ and Westpac all offering just 3.05% p.a. for 6 months.

CommBank’s 1-year standard rate has also dropped to 3.40%p.a., but the special offer for 1 year term deposits is 3.80%. This is closer to the leading rate, but still a far climb, with Heartland leading the charge offering 4.15%p.a. for the same term.

“It’s pretty bleak when even the special offers start with a three. Feels like more of a warning than a reward,” says Wastell. “The gap between the majors and the market leaders is also getting harder for savers to ignore, especially those with a big chunk of change looking to lock in certainty.”

In a falling rate environment, term deposits can be a smart way to lock in a higher return, but if the rate starts with a 2 or a low 3, it’s probably not the deal you think it is.

RBA cut likely, but how long will the banks stay generous?

A 25 basis point rate cut is now fully priced in for next Tuesday, and lenders have already started making their move. But if history is anything to go by, the early cuts are usually the most generous, and they don’t always last.

So far, banks have been pretty quick to pass on rate relief. In both February and May, the full 25 basis point cuts were broadly passed on to variable home loan customers. In fact, by July, every single lender tracked in the Mozo database had passed on the May cut in full. But that kind of generosity doesn’t usually stick around, and when we looked back at the past cutting cycles, the pattern became clear. Banks often move fast at the start, then begin holding back. 

“Banks tend to come out swinging early,” says Wastell, “but can start holding back as the cycle continues, especially once they’re under pressure to protect their margins.” 

In 2019, more than half of lenders passed on the first full 25 basis point cut. A month later, only 15% passed on the second. By the time the third cut landed in October, that figure had dropped to just 9%. The same behaviour occurred during the pandemic. The first emergency cut in March 2020 was widely passed on (only 13% of lenders held back) but the second was barely reflected in home loan rates. In fact, ANZ was the only big four bank to pass on even part of it and by the time we got to the final cut in November, 43% of lenders didn’t pass it on at all.

“That means the next cut, which now does seem the most likely outcome of the RBA meeting next week, could be the last one borrowers can rely on to flow through in full,” Wastell continued. 

“The further we go into a cutting cycle, the more important it is for borrowers to watch their bank closely. The best deals still go to those who compare.”

Mozo Banking roundup - What happened in June?

June was the first full month of data since the May rate cut, and the ripple effects are now showing up across banking products. With the financial year drawing to a close, lenders used the EOFY window to fine tune pricing, cut headline rates, and quietly phase out a few uncompetitive offers.

• Home Loans: Variable rates continued their descent, fixed rates also shifted with more options below 5%p.a. surfacing.
• Credit Cards: Two low-rate products were pulled from sale, while some points offers were cut back or reshuffled. A handful of providers, like Kogan Money and Bankwest, boosted cashback and points to stay competitive.
• Personal Loans: Cuts to fixed rates gained pace, particularly among credit unions and customer-owned banks. Teachers Mutual Bank slashed some rates by up to 350bps, while CommBank trimmed headline rates and extended fee waivers.
• Savings Accounts (At-Call Deposits): Rate cuts continued to filter through bonus and base rates, following the RBA cuts. The top ongoing bonus rates now cap out at 5.00%.
• Term Deposits: There has been a widespread retreat in term deposit rates as confidence in multiple rate cuts this year builds. All four major banks made cuts, and 6-month offers starting with a '4' are getting rare.

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. 

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