Mozo Money Moves: A wave of rate cuts, record loan sizes, and the cost of the Great Aussie Dream
In this week’s Mozo Money Moves, our team digs into the latest data that shows average home loan sizes have once again reached record-highs, we look at a number of home loan rate cuts from lenders big and small, and analyse how Aussies’ obsession with houses over units is costing them more than they realise.
Let’s get into it!
Home loan sizes reach new record highs
Lending Indicators data released today from the Australian Bureau of Statistics showed that home loan sizes have one again broken records to reach new heights.
The average loan size for owner-occupier and investor loans across Australia hit a record high of $640,998 in July 2024, climbing 0.7% from the previous month.
Check out all the latest home loan statistics here.
The preference for variable rates over fixed rates continued into July, with new variable rate loans surging by 9.5%, while fixed rate loan commitments took a nosedive, dropping 20.2%. In fact, fixed rates are still at historically low levels and are down a massive 76.4% compared to the same time last year.
Mozo analysis of this ABS data shows the national average home loan size for owner occupiers has jumped from $447,829 in 2019 to $640,998 in 2024, a difference of $193,169 in just five years.
To find out how much more that was in dollar terms for monthly repayments, Mozo looked at the historical average variable rates in the Mozo database across all lenders for owner occupiers paying principal and interest with an LVR of 80%. The average variable rate was 3.92% in July 2019 and 6.79% in July 2024.
Using the above average loan sizes, and those average variable rates, Mozo analysis showed Aussie buyers are coughing up potentially $2,101 more every month in repayments than they were five years ago, based on a owner occupier loan paying principal and interest over a 25 year loan term.
“These figures highlight the growing burden on borrowers as property prices continue to rise across the country, and the pressure this is having on household budgets, consumer spending and as a result, economic growth” says Rachel Wastell, Mozo personal finance expert.
This slowdown in economic growth is reflected in the latest National Income Account figures, also released this week, which showed Gross Domestic Product (GDP) per capita was down for the sixth consecutive quarter, falling 0.4%.
Banks spring into action, cutting fixed and variable rates
In response to this economic slowdown, banks are seeming more sure that the Reserve Bank of Australia (RBA) is done with their hiking cycle, and as a result home loan rates on the Mozo database are starting to drop.
Though we are only six days into September, several home loan rate cuts from key players like ING, Ubank, Macquarie, and Bankwest have been made across fixed and variable home loans for both owner occupiers and investors. These cuts are likely to continue into September and are a reflection of the growing industry confidence that the RBA’s next move is a cut.
Home Loan Rate Cuts in September so far
| Lender | Effective date | Amount cut (p.a.) | Fixed or Variable |
| Bank of Sydney | 6 September | 0.05% to 0.15% | variable |
| Bankwest | 5 September | 0.20% to 0.50% | fixed |
| Gateway Bank | 4 September | 0.04% to 3.07% | variable |
| Greater Bank | 6 September | 0.10% | fixed |
| Heritage Bank | 5 September | 0.10% | fixed |
| IMB Bank | 5 September | 0.10% to 0.30% | fixed |
| ING | 5 September | 0.05% to 0.60% | fixed/variable |
| Macquarie | 6 September | 0.10% to 0.66% | fixed |
| ME | 6 September | 0.05% to 0.25% | fixed |
| Newcastle Permanent | 5 September | 0.10% to 0.20% | fixed |
| People's Choice | 5 September | 0.10% | fixed |
| Police Bank | 6 September | 0.05% to 0.85% | fixed/variable |
| Southern Cross Credit Union | 3 September | 0.10% to 0.30% | fixed |
| Teachers Mutual Bank | 5 September | 0.20% | variable |
| ubank | 3 September | 0.20% to 0.73% | fixed |
When looking at cuts from the Big Four, NAB, Commbank and Westpac have all made moves to cut their fixed rates, with ANZ the only Big Four bank yet to cut its fixed rates. These big banks dominate the home loan market, so moves from these major players is often a reliable signal of what the market is broadly thinking, and these cuts to fixed rates do suggest the top economists working at these banks are expecting rate cuts, not hikes.
“With home loan rate cuts starting to flow through from key lenders, it’s important for existing mortgage holders to make sure they’re not missing out,” says Wastell.
“It’s a good idea for existing borrowers to contact their bank to ensure they’re getting the same rate cuts being offered to new customers. Often, loyalty doesn’t pay when it comes to home loans, so if your lender isn’t offering you a better deal, it could be time to consider switching.”
“With the RBA’s next move likely to be a cut, we expect to see more reductions in home loan rates coming through, so it’s crucial for borrowers to stay on top of what’s available and shop around.”
Home Loan Insights
- CommBank reduced interest rates for borrowers on its Extra Home Loan and CommBank Wealth Package recently, but how do these new rates stack up?
- The number of people looking for a helping hand when buying a property has increased in 2024, despite more buyers going solo.
- A property valuation is necessary if you’re applying for a home loan, but if you’re not sure how it works, how much it costs, or how to organise one, we’ve got you covered.
Mozo analysis: 1 in 3 will only buy a house, despite units being up to 32% cheaper
This week, Mozo also released new research revealing the high cost of Australians' obsession with buying a house over a unit. The analysis showed despite houses costing up to 32% more than units in capital cities*, with a median value of $997,352 for houses compared to $679,849 for units, houses are still the Aussie dream.
Opting for a house over a unit could mean borrowers need to find an additional $63,500 for a 20% deposit in capital cities and end up paying $1,762 more in monthly mortgage repayments. Over a 25-year loan term, buyers choosing houses over units could end up paying a whopping $274,405 more in interest.
Houses vs Units: Deposit Costs
| Region | Property Type | Median Value | 20% Deposit | Cost Difference |
| National | House | $867,775 | $173,555 | |
| Unit | $660,423 | $132,085 | $41,470 | |
| Capital Cities | House | $997,352 | $199,470 | |
| Unit | $679,849 | $135,970 | $63,500 | |
| Regional Areas | House | $651,864 | $130,373 | |
| Unit | $565,868 | $113,174 | $17,199 |
Houses vs Units: Interest & Repayment Costs
| Region | Property Type | Median Value | Loan Amount | Monthly Repayment | Repayment Difference | Total Interest (25 Years) | Interest Savings (25 Years) |
| National | House | $867,775 | $694,220 | $4,814 | $749,979 | ||
| Unit | $660,423 | $528,338 | $3,664 | $1,150 | $570,827 | $179,152 | |
| Capital Cities | House | $997,352 | $797,882 | $5,533 | $861,967 | ||
| Unit | $679,849 | $543,879 | $3,771 | $1,762 | $587,562 | $274,405 | |
| Regional Areas | House | $651,864 | $521,491 | $3,616 | $563,376 | ||
| Unit | $565,868 | $452,694 | $3,139 | $477 | $489.054 | $74,322 | |
| source: mozo.com.au Based on 25 year terms, Owner Occupier Principal & Interest, LVR <80%. Average variable rate taken from Mozo product database as of 3rd September 2024. Median values taken from Corelogic Home Value Index data. | |||||||
Despite the clear financial advantages of units, 31% of potential buyers^ are still focused on houses, with many seeking properties with backyards. Rachel Wastell, Mozo’s personal finance expert, underscored the need for buyers to reconsider their choices.
“The great Australian dream of owning a house may need to shift to owning a unit if buyers want to borrow less and save more. The numbers don’t lie, so it may be time for potential home buyers to reassess their priorities.”
"With the property market continuing to heat up, prospective buyers should be considering whether paying the additional cost that comes with a house is justified.”
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.
Disclaimer: Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice. Target Market Determinations can be found on the provider's website. While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.
*Corelogic Home Value Index
^Mozo.com.au commissioned a nationally representative survey of 2,129 Australians aged 18 years and over between 19 July and 5 August 2024
Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.
While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.