Mozo Money Moves: CommBank doubles down on RBA rate cut call as fixed-rates and term deposits plunge

Welcome back to Mozo Money Moves, your weekly finance fix where we dive into the latest changes in personal finance products. This week CommBank doubled down on its Reserve Bank of Australia rate cut call, the Mozo database tracked more fixed rate home loan cuts, term deposit rates continued to fall, and Macquarie boosted its savings account offer. 

CommBank doubles down on rate cut call 

This week, CommBank released its monthly Household Spending Insights (HSI) data for September 2024. The index declined by 0.7% in September, despite Father’s Day, and the NRL and AFL grand finals spiking recreational spending. 

According to CommBank, six of the twelve spending categories tracked for the HSI, including hospitality, transport, household goods, and food and beverages, declined over September. 

So does that mean we’re nearing the grand finale of inflation? CBA Chief Economist, Stephen Halmarick, seems to think so. 

“The spending slowdown in September was expected after an early Father’s Day led to consumers splashing out on household goods and hospitality for Dad.

“Although we saw a rise in Recreation spending associated with the AFL and NRL Grand Finals, consumer spending overall remains subdued, now growing at just over two per cent for the year.

“It’s important to note that the only other spending categories to rise in September were all essentials, indicating that increased take-home pay from tax cuts is largely being used to pay down debt and on staples, not spending on discretionary items.

“This trend is reflected in the year to September, supporting our view that softer economic data, coupled with a further deceleration in inflation will see the RBA cut interest rates in December 2024.” 

The other Big Four banks maintain that interest rates will come down in early 2025.

Household spending insights 

• Jobs, income and rates weigh on cost weary Aussies, according to MLC’s new Financial Freedom Report. 

Fixed rate cuts accelerate towards the new year

As we draw closer to the first RBA rate cut, fixed rates continue to trend downwards. 

Last week, Mozo finance expert Rachel Wastell reported that there had been 87 fixed rate cuts in October – that number has now jumped to 123.

The bulk of these cuts centre on 2 and 3-year fixed rates, which is where the lowest average rates in the Mozo database are right now.

While the average, owner-occupier fixed rate in the Mozo database starts with a ‘6’ across all term lengths, the most competitive 2-year fixed rates are around 50 basis points below average.

Top owner-occupier 2-year fixed rates

Term deposit rates plunge 

Approaching what appears to be an inevitable cash rate cut, the trend from term deposit providers has generally been to make shorter term rates more attractive.

Since the beginning of October, the Mozo database has tracked 106 term deposit cuts, with providers mainly targeting 6-, 12-, and 24-month term deposit rates. 

This brings the average personal term deposit rates (at a $25k balance) in the Mozo database to:

• 3 months: 3.91% p.a.
• 6 months: 4.34% p.a. 
• 9 months: 4.26% p.a. 
• 12 months: 4.46% p.a. 
• 24 months: 3.90% p.a. 
• 36 months: 3.72% p.a. 
• 48 months: 3.55% p.a. 
• 60 months: 3.57% p.a. 

Source: Mozo.com.au accurate as at 18 October 2024, based on a personal TD with a balance of $25,000. 

Macquarie boosts savings account intro rate 

Macquarie increased its 4-month introductory savings account rate by 15 basis points, to 5.50% p.a., for balances up to $250,000. After the intro period, the rate reverts back to 5.00% p.a. 

The Macquarie Savings Account now boasts the second-highest intro rate in the Mozo database, 25 basis points behind Rabobank’s High Interest Savings Account (HISA), at 5.75% p.a. for the first 4 months. 

However, Rabobank’s HISA reverts back to a significantly lower rate of 4.35% p.a. after the intro period, which is 65 basis points lower than Macquarie’s base rate. 

In both cases, customers will need to link their savings accounts to a transaction account from the same provider. So, for those comparing high interest savings accounts, the choice could come down to that all-important base rate.

On the topic of linked transaction accounts, Macquarie also cut the rate earned on its Bank Account product. The rate was cut from the ongoing savings rate of 4.75% p.a., down to 2.75% p.a. for balances up to $1 million. This is still fairly competitive as far as a bank account with an interest rate goes, according to Mozo’s data. 

Savings and bank account insights

• The Australian government announced plans to outlaw debit card surcharges as part of a broader crackdown on consumer fees.

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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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