Mozo Money Moves: Trump’s tariffs, a decade of RBA rate moves and a pricing shift in personal loans

This week’s Mozo Money Moves takes a step back from our recent focus on how variable home loan and deposit rates have responded to the RBA move.

Most lenders have now passed on the 0.25% interest rate cut to savers and mortgage holders after the Reserve Bank of Australia (RBA) cut the cash rate last month, so this week we’re diving into analysing what’s happening in other lending categories. 

We also share our latest analysis on how Trump’s Tariffs could impact interest rates.

How could Trump’s Tariffs impact you?

This week, Mozo money writer Peter Terlato took a deep dive into how Trump’s Tariffs could impact borrowers, and the results aren’t pretty for Aussie homeowners and potential buyers.

With 25% import tariffs on steel and 10% on aluminium, the cost of construction materials is set to rise, which in turn could fuel Australia's housing shortage and push up already sky high property prices. As Terlato explains, developers might delay or scrap projects, leading to fewer new homes hitting the market.

However, what’s most important to note, is that these tariffs could lead to inflation, which might prompt the Reserve Bank of Australia to hike the cash rate.

“Australia just experienced the most aggressive rate hiking cycle since the early 1990s, and most borrowers have barely had a week to celebrate lower rates before facing the looming threat of yet another hike,” says Rachel Wastell, Mozo’s money expert.

“If the cash rate does need to be raised again, that $100 some homeowners were hoping to pocket each month could be snatched away before they’ve even had a chance to enjoy it.”

Higher interest rates could increase mortgage repayments, putting extra pressure on households already feeling the squeeze. And for potential buyers, it could make an already difficult property market even harder to navigate. You can read the analysis in full here.

10 years of RBA changes, which loans are keeping up?

The RBA cash rate is essentially Australia’s “official interest rate”, as it directly influences how much it costs for banks to borrow from each other overnight (the interest rate on unsecured overnight loans between banks). 

So, theoretically, any changes in the RBA cash rate should then shape the overall “cost of money” and lending rates. However, Mozo’s 10 year analysis of changes in the cash rate and average lending rates reveal a clear disconnect – not all variable rate financial products respond in the same way or at the same pace.

“Looking at historical data, the pattern is clear – for lending products outside of savings and home loan rates, borrowers may not see the same immediate or significant benefits,”  says Wastell.

“This is especially the case in regard to the last RBA movement, as we have seen a very limited amount of rate cuts to credit cards and personal loans.”

Over the past decade, home loan and savings rates have moved closely in line with the RBA cash rate, with home loans tracking more closely and savings rates following not far behind. As you can see from the graph above, since September 2014, variable home loan rates have mirrored the cash rate’s long decline—and more recently, its sharp rise. The biggest exception to this came in 2023, after the cash rate surged over 4% from its record lows in 2022, and banks stopped passing on the increases to savings accounts as consistently. Notably, lenders kept passing on the rate increases to home loans.

“Home loan rates and the cash rate move almost in lockstep—when the RBA makes a move, mortgage rates follow,” says Wastell. “Savings rates aren’t far behind, but in 2023, we saw a clear slowdown in banks passing on hikes to savers.”

“Lenders are quick to lift mortgage rates when the cash rate rises, but savings rates don’t always get the same treatment. Right now, banks are making noise about home loan cuts because it’s a win for borrowers. But when rates start climbing again, they’ll shift gears and start talking up savings accounts instead.”

Mozo has been tracking cuts to variable home loan rates, and whether they match the RBA move, in the Mozo RBA Rate Match Table. If you want more detail on these moves, our editorial team has running commentary on Mozo Live to cover rate changes in more depth.

Credit card rates barely budge when RBA moves

Looking at other lending products, Mozo’s analysis clearly shows that over the past decade, despite the cash rate increasing by more than 4%, the average credit card purchase rate has barely changed.

The Mozo database, which looks at 196 credit cards from 60 different providers, shows the average credit card purchase rate, with a cash rate of 4.10%, sits at 17.64% p.a. In September 2020, when the cash rate was just 0.25%, the average credit card purchase rate was 16.85% p.a.

That’s a 3.85% difference in the official “cost of money” (cash rate), yet just a 0.79% difference in average credit card purchase rates.

Since the RBA cut the cash rate on February 18, credit cards have been largely unaffected by the move. Just one credit card provider has announced credit card rate cuts since the RBA moved; Qudos Bank. Qudos bank has reduced the rates on all three of their credit cards by 0.25%, the LIfestyle, Lifestyle Plus and Visa Platinum on 28 February 2025.

"Credit card rates barely flinch when the RBA moves,” explains Wastell. “Whether the cash rate goes up or down, they stay stubbornly high, and even if a few providers pass on a 0.25% cut, it’s unlikely to make a real difference when rates are already hovering around 17%."

"The best way to beat high credit card interest isn’t to wait for banks to cut rates, it’s to avoid paying interest altogether by clearing your balance each month."

Personal loan rates break away from the RBA

Since the RBA cut the cash rate last month, just seven lenders have announced cuts across multiple personal loan products – Moneyplace, Liberty,  Qudos Bank, loans.com.au, Queensland Country Bank, Australian Unity, Bank Orange and Firstmac. Wisr cut a maximum range on one product. 

That’s just eight lenders out of the 80 providers in the Mozo database making any moves to personal loans, in comparison to 91 out of 95 home lenders cutting variable home loan rates. 

“Banks are moving quickly to announce home loan cuts since the RBA moved, but only a handful of lenders have announced changes to personal loans,” says Wastell, “personal loan rates used to follow the RBA’s lead but it looks like recently that link has broken.”

In the personal loan and car loan sectors, average rates on personal loans were tracking in the direction of the RBA cash rate until September 2023. 

In September 2021, with a 0.10% cash rate, the average variable unsecured personal loan rate was 8.93%. Two years later, as the cash rate rose to 4.10%, personal loan rates only climbed to 9.60%. 

Lenders shift pricing models for personal loans

While the recent RBA rate cut hasn’t triggered widespread reductions in variable rates for personal loans, over the past few years lenders have been shifting toward new pricing models.

“Even after the cash rate climbed 4 percentage points, average personal loan rates have dipped, proving lenders aren’t just taking cues from the RBA anymore,” says Wastell.

“From our analysis, it looks like the key reason for this is that lenders are switching to risk-based pricing models, varying rates significantly depending on the credit profile of the borrower, across both variable and fixed rate products.”

Risk-based pricing – where lenders price variable rates based on individual risk profiles – are growing in popularity in the personal and car loan market. Mozo analysis shows that the number of providers using risk based pricing has  increased by 10% since March 2021, and a whopping 48% since March 2018.

Essentially, lenders are now offering much lower "starting rates" and then adjusting the actual rate provided based on the borrower’s ability to pay back the loan. This means lower-risk borrowers with better credit histories or financial profiles are rewarded with more attractive rates. 

Mozo’s latest analysis of 280 personal loans (excluding 44 green loans) shows a clear trend—secured loans continue to offer lower rates than unsecured options, and fixed rates remain competitive. This is not surprising as both offer forms of “security” for the banks, either in the form of a lower-risk borrower or a fixed rate of return over an extended period. 

According to the Mozo database, the average variable personal loan rate sits at 9.85% for a $10,000 loan and 9.54% for a $30,000 loan, while 3-year fixed rates are slightly lower at 9.23% and 8.78%, respectively. 

Secured personal loans come in cheaper, with variable rates averaging 8.29% ($10K) and 8.26% ($30K), while 3-year fixed rates sit at 8.37% and 8.21%. Unsecured loans, however, carry steeper rates, with variable loans averaging 11.19% ($10K) and 10.84% ($30K), and fixed rates at 10.28% and 9.68%. 

Top 5 Unsecured Personal Loan Rates (Risk-Based Pricing)

“When filtering Mozo data using the risk-based pricing approach, the difference in rates is impossible to ignore,” says Wastell.

“The best unsecured loans with risk-based pricing offer rates sitting around 6.5% but those without are sitting very close to 9%.”

Top 5 Unsecured Personal Loan Rates (Excluding Risk-Based Pricing)

Green loans drive down personal loan averages

The reason why green loans have been excluded from the analysis is because green loans substantially drive down the overall loan average, which skews the data. 

Mozo’s analysis shows that including green loans in overall personal loan averages, reduces the average variable personal loan rate from 9.85% to 9.36% for a $10,000 loan and from 9.54% to 9.09% for a $30,000 loan. Similarly, average fixed rates drop from 9.23% to 8.92% ($10K) and 8.78% to 8.52% ($30K).

Green loans are predominantly ‘green’ car loans (for electric or hybrid vehicles) or ‘green’ personal loans for sustainable home upgrades. One of the reasons why banks are offering lower rates on these products in order to build collateral for green asset-backed securities.  

There are currently 27 lenders in the Mozo database offering personal loans specifically for green purposes, a 35% increase compared to 2023. 

“Green loans offered by banks come with strict eligibility criteria, so they have a layer of assurance that these financial investments are genuinely sustainable,” explains Wastell.

“As banks have a lower volume of green loans (relative to overall loans) and therefore insufficient green collateral, lowering interest rates to attract green investment can help increase the banks’ ability to issue green securities.”

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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. 

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