Mozo Money Moves: CBA fee drama explained, while RBA likely to keep rates steady

This week, there's been a mix of big moves and important updates for Aussie consumers. The Commonwealth Bank hit pause on controversial account changes after facing a major backlash over assisted withdrawal fees. Meanwhile, the Reserve Bank is expected to leave the cash rate unchanged as 2024 wraps up. 

First-home buyers are getting some much-needed support, thanks to fresh proposals aimed at making homeownership a little more achievable. On the banking front, Qudos and Bank Australia are stepping forward with plans for a merger, launching a new hub to keep members in the loop. ASIC is also making waves, looking to tighten its oversight on crypto and digital assets. 

And just in time for the holiday season, retirement costs have dipped, offering a bit of relief for Aussies planning their futures. Plus, if you're looking to lock in a great deal, we've rounded up the cheapest home loan rates available this December.

Let’s get into it!

CBA halts account changes after withdrawal fee backlash 

Commonwealth Bank (CBA) has backpedaled on plans to switch customers off a discontinued transaction account, after it was revealed that the account they’d be moved to charges a fee for assisted cash withdrawals. 

This decision sparked backlash from customers and politicians alike. In response to mounting pressure, the bank announced it would pause the shift of customers from its "Complete Access" account to its "Smart Access" account, which imposes a $3 fee on assisted withdrawals in a branch, agency or through telephone banking. 

The change affects about one million customers – the majority of which are either better off or unaffected by the switch, according to the bank. Complete Access customers are charged a $6 monthly account keeping fee, while Smart Access accounts incur a $4 monthly charge. However, both of these fees can be waived if you're under 30 years old, or if you deposit at least $2,000 per month (excluding bank-initiated transactions).

CBA's move could have ripple effects on the wider banking sector, as Australia's largest bank often sets trends that others follow. This pause might prompt other banks to reconsider their own fee structures, especially as cash withdrawal charges become more common. While Westpac, NAB, and ANZ currently do not charge for in-branch withdrawals, CBA's decision could prompt them to reconsider, especially as the industry sees an ongoing shift away from cash transactions.

The announcement also raises questions about the future of cash in Australia. While the government is committed to ensuring access to cash, we’re undeniably moving closer to a cashless society. With digital payments becoming the norm, CBA’s fee changes – and subsequent reversal – reflects the tension between ensuring cash remains available and the increasing push towards digital-first payment systems.

No change expected for last cash rate call of 2024

The Reserve Bank of Australia (RBA) is widely expected to keep the cash rate on hold next week, with many economists predicting no change for December. The Big Four banks are aligned in their end of year predictions, although the Commonwealth Bank (CBA) anticipates relief for borrowers sooner rather than later next year. 

The RBA remains resolute that any movement on rates in 2025 will depend on a continued reduction in inflation, particularly underlying inflation, in the coming months.

Big Four cash rate forecasts

• CBA: First cut expected February 2025, falling to 3.35% by December 2025.
• Westpac: First cut expected in May 2025, falling to 3.35% by December 2025.
• ANZ: First cut expected in May 2025, falling to 3.85% by August 2025.
• NAB: First cut expected in May 2025, falling to 3.10% by June 2026.

New recommendations give first-home buyers a boost 

This week the Senate Economics References Committee released its latest report on home ownership , laying out several recommendations aimed at making it easier for first-home buyers to get into the property market. The proposals focus on adjusting financial regulations to prioritise first-home buyers while keeping the broader economy in check.

Amending APRA’s objectives

The committee suggests updating the Australian Prudential Regulation Authority (APRA) Act 1998 to include promoting first-home ownership as a goal. This change would push APRA to consider the challenges faced by first-home buyers when shaping policies or overseeing lenders. It’s a move designed to shift some focus towards supporting first-time buyers without compromising the stability of the financial system.

Serviceability buffer adjustments

The report recommends tweaking the home loan serviceability buffer, which is the extra margin lenders add to interest rates when assessing loans. For first-home buyers, the buffer could be lowered to reflect economic conditions, making it easier to qualify for a loan. This approach is designed to help without adding too much risk, especially during times of higher interest rates. While interest rates are forecast to drop in 2025, Mozo analysed the current buffer and its impact on mortgage holders, showing the effect in dollar terms.

Capital risk weighting flexibility

Another idea is to allow lenders to use lower capital risk weightings for first-home buyer loans, as long as proper safeguards are in place. These weightings affect how much capital banks need to hold for each loan. Reducing this requirement could encourage banks to offer better deals to first-home buyers, making loans more affordable and accessible.

If these recommendations are adopted, they could make a real difference for people trying to buy their first home. By lowering financial and regulatory hurdles, the measures aim to give first-home buyers a better shot at entering the market.

The latest lending indicators from the Australian Bureau of Statistics (ABS) saw the number of new home loans for first-time buyers across Australia decline 3.2% in September 2024. While the overall trend was down, year-on-year figures showed a slight improvement of 2.0%. 

The picture across different states was mixed. Queensland, New South Wales, and Victoria all saw decreases in new loan commitments, while South Australia, Western Australia, Tasmania, the Australian Capital Territory, and the Northern Territory experienced growth.

Qudos and Bank Australia launch merger hub

Qudos Bank has launched a new Member Hub to keep its customers in the loop about the proposed merger with Bank Australia. The hub is designed to provide all the key details about the merger in one place, including what it means for customers, the timeline for the process, and answers to frequently asked questions. Members can also ask questions and provide feedback.

The merger must be approved by members of both banks. A vote on the merger is expected to take place by early to mid-2025, with the target date for the first day of the merged bank set for 1st July 2025. This means that while changes are on the horizon, members still have a say in whether this merger moves forward.

ASIC eyeing improved crypto regulation

The Australian Securities and Investments Commission (ASIC) is set to broaden its oversight of the cryptocurrency and digital assets sector. In a recent consultation paper , ASIC proposed updates to its guidance on how existing financial product definitions apply to digital assets. The aim is to provide greater clarity on the current law and ensure that entities offering financial services related to crypto-assets are appropriately licensed.

ASIC's proposed updates include adding 13 practical examples to illustrate how financial product definitions apply to digital assets and related products. This initiative aims to encourage smart financial innovation while making sure consumers are kept safe. The consultation period is open until February 2025, allowing stakeholders to provide feedback on the proposed changes.

Retirement costs dip just in time for Christmas

Retirees have received an early Christmas gift, with the cost of funding a comfortable retirement dropping by 0.5% in the September quarter. The latest Association of Superannuation Funds of Australia (ASFA) Retirement Standard guide revealed an easing in retirement expenses, driven by lower fuel prices and government energy rebates, brings some much-needed relief after years of rising costs.

Now, couples aged around 65 need $73,031 annually to maintain a comfortable lifestyle, while singles require $51,814. This means a single person retiring at 67 would need $595,000 in superannuation savings, while a couple would need $690,000.

Cheapest home loan rates in December

Despite the average variable rate in the Mozo database being 6.74% p.a.†, there are a number of home loans currently offering lower interest rates. 

Out of the offers we track, the lowest variable home loan rates are:

Source: mozo.com.au as at 6 December 2024, leading owner occupier variable rate principal & interest home loans at $400,000, all LVRs. 

The lowest fixed-rate home loans are:

Source: mozo.com.au as at 6 December 2024, leading owner occupier variable rate principal & interest home loans at $400,000, all LVRs.

*WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

†Average variable rate based on an owner-occupier, paying principal and interest on a $400,000 home loan over 25 years, with a loan-to-value ratio of <80%. Data taken from the Mozo database, correct as at 1 December 2024.

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