Mozo Money Moves: RBA holds steady, but banks keep shifting rates, fees, and rewards

This week was another big week in personal finance, as the Reserve Bank of Australia (RBA) met for their second last meeting of 2024. Despite a cash rate hold, banks have continued to shift rates, fees and rewards offers on the Mozo database. 

These shifts serve as a timely reminder for borrowers and spenders alike to stay vigilant, as money moves don’t always align with the RBA.

Let’s dive in!

RBA Holds Steady, But Inflation Remains a Challenge

On Tuesday, the RBA kept the cash rate at 4.35%, marking a full year since the last hike. As they mentioned in their statement, one of the reasons for the long pause is that while the annual headline inflation is now closer to the RBA's target of 2-3%, underlying inflation - the trimmed mean - which filters out volatile items, remains at 3.5%. This persistent inflation has the RBA cautious, as they don’t expect inflation to sustainably reach the target midpoint until 2026.

"With inflation still above the target, the RBA is holding firm on rates," says Mozo’s personal finance expert Rachel Wastell. “Headline inflation has come down, but underlying inflation – the kind that shows ongoing trends – is still stubbornly high.”

“The Board’s main focus is getting inflation back to target, and the most recent statement makes it clear they’re prepared to keep rates restrictive until there’s clear movement toward that goal.” 

Last week, the Commonwealth Bank joined Westpac, ANZ and NAB by shifting their cash rate forecast back to early 2025, and with potential rate cuts on the horizon, some borrowers may be wondering will the banks pass on the cuts in full? Wastell thinks so.

"In the past, some banks have held back passing on RBA rate cuts in full, particularly when multiple cuts were issued back-to-back. In 2020, around 10% of lenders held off on passing one cut when two were made in the same month," Wastell explains.

“However, this was a rare situation, and in the current high-rate climate, this is less likely.”

Despite this week’s annual results showing a slight drop in Big Four profits (the Commonwealth Bank and NAB dropped by roughly 6%, ANZ by 8% and Westpac by 3%), these numbers still sit in the billions.

“Banks have been posting bumper profits, and it would be tough to justify withholding rate cuts from Australians who’ve endured 13 hikes in the past couple of years. With the intense public focus on cost of living issues, any bank that holds back could face significant backlash.”

“While there might be a few outliers, the likelihood is that most banks will pass on rate cuts in full, which should be welcome news to those borrowers now paying upwards of a thousand dollars more a month just to cover their mortgage.”

RBA Insights

• Despite the lowest inflation figures in years, the Reserve Bank of Australia (RBA) has kept its foot on the brakes. What’s holding them back? 
• When is the next RBA decision, how do RBA interest rate decisions affect your cost of living? Find out how monetary policy meetings work, and why they matter to you.

Home loan rates adjust  despite the pause

Despite a 12 month RBA cash rate hold, lenders continued to adjust home loan rates this week. 

In the fixed rate space, cuts continued from Bank Orange (formerly Orange Credit Union), which reduced its 2- and 3-year fixed rates for owner-occupiers and Southern Cross Credit Union, which applied cuts across all fixed terms for both investors and owner-occupiers. Police Bank joined in by dropping 1-year fixed rates by 40-55 basis points across all loan types, and Greater Bank reduced its rates by 10-15 basis points on 1- to 5-year terms. While these are smaller, regional brands, these cuts are reflective of the wider fixed rate cuts across the board that Mozo has been tracking over the past couple of months.

Not every lender followed this cutting trend however, as ME Bank instead opted to increase its fixed rates by 10 basis points on all terms. Meanwhile, Reduce Home Loans made the decision to pull its Economizer variable loan from the market altogether.

“These changes show the home loan market is still competitive right now, and is all the more reason for borrowers to stay informed and proactive. Just because the RBA isn’t moving doesn’t mean your lender won’t,” adds Wastell.

Home Loan Insights

• Right now, long-standing customer-owned IMB Bank is giving borrowers the chance to get ahead on their home loans with $4,000 cash back - here’s how it works.
• Mozo’s research team has analysed the latest home loan statistics for November, to see where rates are sitting for November, here’s everything you need to know.

Big Four banks change personal loan fees as Wisr lures lower-risk borrowers

On Monday, NAB raised its monthly fees on both fixed and variable unsecured personal loans, increasing the charge from $10 a month to $15 a month - adding an extra $60 per year per borrower. 

While this fee hike might seem modest, it could be part of NAB's broader strategy to bolster its profit margins, after the bank's full-year results released on Thursday showed a 6.1% drop in net profit and an 8.1% fall in cash earnings compared to FY23. With the bank under pressure from declining net interest margins, raising fees could help offset these losses and improve profitability.

The Commonwealth Bank was another Big Four making changes to personal loan fees this week, reintroducing the $250 application fee waiver for its unsecured personal loan products. This fee will now be waived until 25 February 2025, but only for unsecured personal loan products. Recently, they removed the waiver, as we reported here, however this has now been returned.

In contrast, Wisr is taking a different tack to attract lower-risk borrowers, reducing its starting rates on unsecured personal loans from 8.74% p.a. to a more competitive 6.74% p.a. for loans between $5,000 and $63,000. However, borrowers should be aware that the maximum rate has risen from 23.29% to 24.54% p.a., so it's important to keep an eye on the final rate after the risk assessment is completed. 

For clarity, starting rates in personal loans are not introductory rates or special rates. With risk-based pricing, lenders will show a starting rate (the lowest rate a borrower can secure, typically for the lowest-risk borrowers) and a maximum rate (the highest rate they could be charged, typically for the highest-risk borrowers).

“While the lower starting rate on a personal loan may look appealing, borrowers need to make sure they don’t end up paying more if they fall into a higher-risk category,” explains Wastell. 

“Personal loans are moving more toward risk-based pricing, so it’s essential for borrowers to carefully assess how their individual risk profile and financial situation might impact the actual rate of interest they end up being charged.”

Credit card rates rise and rewards offers change.

On Tuesday, Qantas Money hiked purchase rates for the Qantas Premier Frequent Flyer credit cards (Everyday, Platinum and Titanium) from 19.99%p.a to 20.99%p.a., following the Big Four trend Mozo noted earlier this year of pushing the purchase rates of rewards credit cards over that 20% mark. 

On Wednesday, Qantas Money made further changes to the Qantas Premier Platinum Frequent Flyer card, reducing its bonus points offer from 100,000 to 80,000 points.

“In Australia, the rise in purchase rates and the devaluation of rewards cards can be traced to three key factors,” says Wastell. 

“First, the regulatory changes around interchange fees, which were capped by the Reserve Bank of Australia (RBA) in 2017. Second, the increasing cost of the perks attached to these cards. And third, the fact that credit cards are becoming less profitable as other forms of credit, like Buy Now Pay Later (BNPL) services, gain in popularity.”

But it’s not all bad news for cardholders. On Thursday, Coles extended its No Annual Fee Mastercard and Rewards Mastercard offers through March 2025, giving cardholders more time to earn 10,000 Flybuys points when they spend $3,000 or more on eligible purchases within the first 90 days of approval.

Balance transfers are getting pricier.

It’s not just rewards offers being devalued, as changes on the Mozo database show balance transfer terms are also shifting. On Thursday, the Bank of Queensland also introduced a 2% balance transfer fee on the Low Rate Visa Credit Card which has 0% interest for 18 months and a 13.99%p.a. purchase rate. This differentiates it from their Blue Visa which offers 0% for 9 months and no fee, but has a purchase rate of 20.99%p.a..

This shifts suggest lenders are increasingly focused on boosting their margins by offering either low rates or minimal balance transfer fees — but rarely both. For borrowers looking to manage debt, finding the best balance transfer deal now requires a closer look to avoid unexpected fees.

“With purchase rates rising and balance transfer terms shortening, it’s crucial for consumers to re-evaluate their credit cards and ensure they have the best deal for their needs,” adds Wastell. 

“If you're carrying a credit card balance, now might be the time to explore a balance transfer, before we see further shifts, as there are still 2 cards offering 0% interest on balance transfers with 28 month terms on the Mozo database, and 9 offering 0% for 24 month terms or more. Just make sure to carefully check the fees and terms before you make the switch.”

Macquarie and BCU hike term deposits rates

While term deposit rates have been falling across the board - as market expectations build for an eventual RBA rate cut - BCU bucked the trend on Tuesday by raising its 1-year term deposit rate from 3.80% p.a. to 4.70% p.a. While this rate was previously 4.50%p.a. (until 16 September when it was cut to 3.80%p.a.) and therefore may have been more of a short term adjustment, this move stands out as most other banks have been reducing rates in anticipation of the RBA’s next move, and is the highest this rate has been since March. While the move did not push BCU to a rate leader position, where Heartland and Family First still sit offering a 5.05%p.a. return, it does shift them much closer to that top spot.

Macquarie also hiked its 3 month term deposit on Thursday, although this was a much smaller 5bps adjustment from 4.90%p.a. to 4.95%p.a. Despite the fact this move was smaller, it has pushed Macquarie into second spot when looking at the most competitive rates for that term. Macquarie now sits just behind Bank of Sydney (for its online only term deposit) and Judo Bank. 

Apart from the hikes banks are making to get closer to the top of rate leader tables, generally term deposit rates have continued to drop across the board.

On Thursday, P&N Bank and BCU both cut their 6-month rates by 10 basis points to 4.85% p.a., while First Option Bank lowered its 6-month rate from 5.00% p.a. to 4.80% p.a., and its 9-month rate from 4.85% p.a. to 4.75% p.a. 

“The trend is clear, banks are adjusting their rates in response to the anticipated rate cuts, which have led to lower returns for savers,” says Wastell. 

“However, while rates are generally coming down as we approach what many expect to be a rate cut, the hikes coming through do show banks are still willing to compete for savers’ dollars in certain segments.”

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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 Roundup here.

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