Mozo Money Moves: All Eyes on Softening Labour Market as TD Competition Heats Up

image of eyes on a green background to represent how all eyes are on the softening labour market after the RBA insights this week.

In this week's edition of Mozo Money Moves, we dive into the latest Reserve Bank of Australia (RBA) update, and provide insights from the June monetary policy meeting.

We also explore key banking moves in June 2024, from home loan rate changes to savings and term deposit trends.

Let’s get into it!

RBA Moves

This week, the Reserve Bank of Australia (RBA) released the minutes from the June monetary policy meeting, where they held the cash rate at 4.35%, and discussed that growth in GDP had been weak in interest rate-sensitive sectors like retail spending and housing construction. 

While the RBA maintained a cautious stance and considered increasing the cash rate, they decided against any further tightening. The RBA acknowledged economic challenges, but made it clear that taking a more cautious stance aligned with their strategy to full employment and manage inflationary pressures.

Mozo’s banking and rates expert Peter Marshall noted that under Michele Bullock's leadership, the RBA's minutes have been taking a slightly different tone compared to her predecessor, Philip Lowe. 

“There's a particular concern in the minutes regarding the softening labour market that historically hasn’t been front and centre,” said Marshall.

“It looks like the RBA is aiming to achieve full employment while balancing economic stability and returning inflation to target when making cash rate decisions.”

Despite the slight uptick in Monthly CPI inflation data that spurred a panic in the media that another rate hike may be on the cards, Marshall stresses that it's crucial to take a careful approach when interpreting data sets in isolation. Especially as inflation is “broadly tracking on a path consistent with returning inflation to target in 2026”.

“Monthly CPI figures don’t always provide a full picture, so can lead to varying interpretations. There is a risk that commentators who are taking these single data sets as indicators of another hike are 'cherry-picking the data'  and ignoring the various other factors at play.”

“The economy is complex and as such the RBA will be taking a holistic view. They will be looking at the gaps in supply and demand more widely, as well as a range of other data releases, they won’t be basing their next cash rate decision off one monthly CPI figure."

Marshall also emphasised the risk that due to the prevalence of Big Four cash rate forecasts in the media, some borrowers may believe these forecasts can influence the direction of the cash rate. 

“Big Four Banks shift cash rate forecasts as part of managing their profit margins on interest rates, as they have rates on long-term financial products like term deposits and fixed rate home loans that they need to lock in for up to five years.”

“Borrowers need to remember that shifts in the Big Four forecasts don’t mean that the RBA targets or decisions will move in response, but they can provide an indicator of where some of the leading economists in the country think the cash rate will be in a few years time.”

“The key for borrowers right now is to focus on preparing for a higher-for-longer rate environment, as we’re likely going to be seeing home loan rates starting with 5,6,7 for a while.” 

If you are looking to refinance to a lower variable home loan rate, these providers are still offering rates starting with 5.

Home Loan
Variable Rate (p.a.)
Comparison Rate (p.a.)
G&C Mutual Bank
Essential Worker Home Loan
Owner Variable Home Loan (Plus)
Pacific Mortgage Group
Standard Variable Home Loan
The Mutual Bank
Special Budget Home Loan
Community First Bank
Basic Variable Home Loan
source: as at 5 July 2024, leading variable rates for owner occupier, principal & interest home loans at $400,000, 80% LVR.
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.

Key Banking Moves in June 2024

This week, Mozo also released the June 2024 edition of the Mozo Banking Roundup

Each month our research team "rounds up" the key retail banking changes in the Australian personal finance market, to see what’s changed. You can subscribe to the roundup here, to get this delivered to your inbox at the beginning of each month.

Here’s the key changes that took place this June:

Home Loans

In June, fixed home loan rates remained relatively steady, but variable home loan rates saw some movement from smaller regional lenders.

"Fixed home loan rates stayed mostly unchanged in June, with major banks not moving at all,” said Marshall.

“Despite the Big Four banks shifting cash rate forecasts, they’ve yet to move fixed rates in 2024, a reflection of just how uncertain economic conditions are at the moment.”

“Variable home loans saw a fair bit of movement from smaller regional lenders, with several hiking rates multiple times in the last six months. This trend suggests a shift from previous competitiveness, potentially influenced by profitability concerns, despite the mergers of many of these regional banks.” 

“Borrowers with regional lenders should be reviewing their interest rates closely, to see if their rates have changed.”

Home Loan Insights

  • One of the big choices you have when choosing a home loan is whether to opt for a fixed or variable interest rate. So, which one should you get?
  • Inflation is predicted to slow down to the RBA's target band in late 2024, unless there are any upsets, but what does that mean for home loans?
  • Despite an extended RBA pause some lenders are still shifting rates, so if you’re looking to switch lenders to a lower rate, how long does it take?
  • Refinancing your home loan can be a good way to save money, but most mortgages last between 25 to 30 years, so how often can you refinance?

Savings Accounts

Savings (at-call) rates stayed relatively steady in June with some minor cuts, while shorter-term 

“The at-call savings market saw minimal movement in June, with small providers making minor rate cuts, but on the whole at-call rates have remained largely unchanged over the past two months,” said Marshall.

“BOQ has introduced a new introductory bonus rate for its Simple Saver account this week though, so the market is not entirely subdued, but it’s likely savings rates will remain roughly at the same level until the RBA makes a move.”

Savings Insights

Term Deposits

Term deposits had the most moves in June in terms of competition between lenders, with a focus on hikes to shorter terms and cuts to longer terms.

“Longer-term deposit rates softened slightly in June although fierce competition persists for shorter terms, particularly those ranging from 9-11 months,” said Marshall. 

“The Commonwealth Bank made an unlikely move, adjusted rates for 11-18 month terms twice within a month, initially reducing and then reverting to previous levels, which does arouse some interest. Why would they be shifting rates so frequently for term deposits when they have yet to move on fixed home loan rates?”

Image of average best and median term deposit interest rates in July 2024 from Mozo database

“Currently, the best rates for up to one-year terms hover between 5.3%p.a to 5.4%p.a. which are very close to the rates being offered on at-call bonus savings rate leaders,” said Marshall.

“So, for those who can’t meet conditions and can lock their savings away for up to a year, these shorter-term deposits could be a good solution.”

Term Deposit Insights

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 RoundUp here.

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