Mozo Money Moves: 132 fixed rate cuts, Westpac cuts its savings rate and a push for early super access
This week, as the Federal Reserve followed other global central banks in cutting interest rates, Mozo tracked the highest savings rate in over 11 years, a savings cut from Westpac, 132 cuts to fixed rate home loans and uncovered new insights into Australians’ desire to dip into their superannuation early.
Let’s get into it!
Fed cuts rates, but RBA may hold off as labour market remains tight
After the Federal Reserve cut its cash rate by 50 bps this week speculation has begun to grow around the RBA’s next steps, and when the first rate cut will come, but it’s not all clear-cut just yet.
On Thursday, unemployment data from the Australian Bureau of Statistics (ABS) showed the labour market remains tight, with unemployment holding steady at 4.2%. This has added complexity to the debate around when the RBA should cut, as returning inflation to target while maintaining full employment is the RBA’s dual focus.
“The risk the RBA is considering is that cutting the cash rate too early while unemployment is low could mean inflation takes longer to return to the 2 to 3 percent target range,” says Rachel Wastell, Mozo’s personal finance expert.
Annual inflation is currently sitting at 3.8%, according to June quarter data, so it still has a way to go before reaching the RBA’s target, and the next quarterly inflation data isn’t due until October 30.
“While borrowers are crying out for a cut after the most aggressive rate hiking cycle since the early 90s, an RBA cut this year is not a done deal just yet. Borrowers should be prepared for an extended pause, at least until the RBA has the quarterly inflation data at the end of October.”
“Potentially, we could be looking at a classic Melbourne Cup Day cut, where the RBA gives borrowers an early Christmas present - but only if inflation plays ball.”
At present, all of the big four banks—except for the Commonwealth Bank—are predicting a rate cut next year, standing alone in forecasting a November 2024 cash rate cut.
Fixed rates continue to drop ahead of RBA meeting
Despite ongoing uncertainty in the economic outlook, and the RBA’s extended cash rate pause, Australia’s retail banking landscape continues to shift, especially in the fixed rate home loan space.
As we reported a couple of weeks ago, a number of lenders have trimmed fixed rates in anticipation of an RBA cut, there are now 23 lenders that have cut fixed rates since the beginning of September.
The cuts continued this week, starting with Community First Bank, and Easy Street reducing fixed rates for 1-3 year terms on Tuesday by 20 bps. Today, another 6 lenders joined the fixed rate cutting brigade. AMP, Bendigo Bank, ME Bank, Qantas, MyState, and Summerland Bank all cut fixed rates between 10 and 55 bps across 1-5 year terms.
AMP Bank cut 2 and 5 year terms by the most, 25 and 45 bps respectively, Bendigo Bank cut 1 and 2 year terms by 45 bps, MyState cut the most off 2 and 3 yr terms, reducing by 55 bps, and Qantas Money cut the most off 3 year terms, by 55 bps. ME Bank made similar cuts across all 1-5 year terms, between 20-25 bps.
Which lenders have cut fixed rates in September?
| Lender | Effective date | Amount cut (p.a.) |
| AMP Bank | 20 September | 0.20% to 0.45% |
| Bank Of Queensland | 11 September | 0.05% to 0.15% |
| Bankwest | 5 September | 0.40% to 0.50% |
| Bendigo Bank | 20 September | 0.45% |
| Community First | 17 September | 0.20% |
| Credit Union SA | 12 September | 0.10% to 0.25% |
| Easy Street | 17 September | 0.20% |
| Greater Bank | 6 September | 0.10% |
| Heritage Bank | 5 September | 0.10% |
| IMB Bank | 5 September | 0.10% to 0.30% |
| ING | 5 September | 0.05% to 0.60% |
| Macquarie | 6 September | 0.10% to 0.20% |
| ME | 20 September | 0.10%-0.35% |
| MyState Bank | 20 September | 0.45%-0.55% |
| Newcastle Permanent | 5 September | 0.10% to 0.20% |
| NRMA Insurance | 20 September | 0.30% to 0.40% |
| People's Choice | 5 September | 0.10% |
| Police Bank | 6 September | 0.05% |
| Police Credit Union | 6 September | 0.10%-0.30% |
| Qantas Money | 20 September | 0.30% to 0.40% |
| Southern Cross Credit Union | 2 September | 0.10% to 0.30% |
| Summerland Bank | 20 September | 0.10% to 0.15% |
| ubank | 3 September | 0.05% to 0.73% |
| Source: Mozo, fixed rate cuts for owner-occupier, principal & interest loans across all terms, LVRs and loan amounts | ||
According to the Mozo database, of all the 132 fixed rate cuts that have occurred in September, half (51%) have been for 2 and 3 year terms. Almost three quarters (74%) have been on those 1-3 year terms, however when it comes to the percentage of those cuts over 20 bps, it is clear lenders are focusing on cutting more off longer terms.
Which fixed rate terms are being cut the most in September?
| Fixed Rate Term | Number of Rate Cuts | % Total Fixed Rate Cuts | % Cuts over 20bps |
| 1 year | 30 | 23% | 53% |
| 2 year | 36 | 27% | 64% |
| 3 year | 32 | 24% | 72% |
| 4 year | 16 | 12% | 88% |
| 5 year | 18 | 14% | 83% |
| source: mozo.com.au as at 20 September 2024, based on owner occupier principal & interest fixed rate home loans at $500,000, 80% LVR. | |||
“Lenders are clearly gearing up for what could be a turning point in the rate cycle, and the trend is a focus on cutting more off those longer terms” says Rachel Wastell, Mozo’s personal finance expert.
“With dozens of cuts in September, particularly on 2- and 3-year fixed rates, banks are looking to attract borrowers with competitive offers before the RBA starts cutting, setting rates based on what they think they’ll need to recoup during that period.”
These cuts have driven the average 2 and 3 year fixed rate lower, setting the stage for a more competitive fixed rate landscape ahead of any official cash rate move from the RBA.
The average 2 year fixed rate on the Mozo database has dropped 6 bps to 6.23% and the 3 year 6 bps to 6.15%, based on a $500,000 owner occupier home loan paying principal and interest and 80% LVR.
Home Loan Insights:
- We’ve seen a slew of fixed rate cuts from major banks in the past two months, but does that mean now is a good time to lock in a low rate on your home loan?
- As Australian home prices continue to rise, the amount we need to save to get a home loan increases too. But what is the average home deposit in Australia in 2024?
- Paying off your mortgage ahead of time can feel like a daunting task, but there are ways to pay down your home loan faster – and doing so could save you thousands.
Mutual Bank launched 6% savings rate and Westpac cuts.
Today, Westpac has followed in ANZ’s footsteps, cutting its Life savings account base rate by 15 bps, from 2.00%p.a. to 1.85%p.a. Simultaneously, they’ve increased the bonus rate on this account by 15 bps from 3.00%p.a. to 3.15%p.a., so the maximum rate available to customers remains the same.
This follows on from ANZ’s move last week, and while minimal should prompt savers using this account to check they are meeting bonus conditions, in order to maintain the same maximum rate.
“Bonus rates can be attractive if you meet the conditions needed to secure the high interest rate, but with changes happening to the base rates on savings accounts - the rate your savings account will revert to if you don’t meet those conditions - savers need to be vigilant,” stresses Wastell.
As savings rates continue to drop across the board, with many lenders cutting term deposit rates in anticipation of a potential RBA cut, our team has also witnessed a surprising twist.
On Monday, The Mutual Bank launched a new special 6.00%p.a. rate for its Internet Saver product, available for savers with balances between $50,000 and $100,000 until January 2025.
“This is the first time since August 2013 that a savings rate starting with 6 has been seen on the Mozo database,” says Wastell.
“In a sea of falling deposit rates, this special offer for Aussies savers shows banks are still willing to fight for your savings, and this type of return could be very beneficial for those who have a big chunk of change they’re saving for a house deposit.”
Savings Insights
- Christmas is approaching - just 99 days, folks! So now might be a good time to start stashing some money away before the big jolly man arrives.
- In great news for Aussie savers, savings rates have made a comeback throughout 2024. So where should you be stashing your cash to ensure you get a decent interest rate?
- CommBank, NAB, Westpac or ANZ – if you prefer to stash your cash with one of Australia’s Big Four banks, here’s how their savings accounts stack up.
Mozo analysis: 1 in 6 would withdraw $21k from super if they could
This week, Mozo released new research that showed half of Australians (56%) believe they should be able to withdraw money from their superannuation at any time, and 1 in 6 Aussies with super funds would withdraw $21,297 from their super on average before retiring if they could.
“Mozo’s research reveals more than half of Australians with super funds believe they should be able to access their super at any time, despite its core function as a retirement safety net,” Wastell says.
"The growing sentiment that Aussies should be able to access their superannuation whenever they need it highlights the increasing public debate on whether Australians should have more flexibility in using their super.”
“This debate is particularly pressing when it comes to major expenses, such as buying a house, given that property prices keep rising and 20% home loan deposits are now reaching six figures*.”
When it comes to how the 1 in 6 Australians who would access their superannuation early if allowed would spend the money, preferences varied significantly by generation.
What was truly shocking was that a quarter of the ‘other’ responses specified they would use the funds to cover debt repayments, including credit card, HECS and household debt.
| What would you use the money you withdraw from your super early for? | Gen Z | Millennials | Gen X |
| A house | 48% | 30% | 39% |
| Dental bills / expenses | 3% | 14% | 9% |
| Medical bills / expenses | 36% | 20% | 15% |
| Other (please specify) | 12% | 36% | 37% |
| Source: Mozo commissioned a nationally representative survey of 2,129 Australians aged 18 years and over, with information collected between 19 July and 5 August 2024 via Researchify. | |||
“Super is intended for retirement, not to cover debts and living expenses, but the data shows that’s what some Australians are hoping to spend it on, which is concerning,” stresses Wastell.
Further, a staggering 28% of Australians with super funds who said they would withdraw super before they retire if they could, didn’t know their super balance and couldn’t estimate it to the closest $10,000.
“The disparity between Australians’ super withdrawal expectations and knowledge of their fund position underscores a desperate need for greater financial education when it comes to superannuation,” stresses Wastell.
“Super is a major part of your future savings, and if you're not up-to-date with your balance, or how your super fund works, you could be taking an unnecessary gamble on your retirement.”
“Regardless of how old you are, super shouldn’t be left for “future you” to deal with. Knowing how to manage your super now is the only way you can be sure you’re setting yourself up for the future.”
* Mozo, Six figure savings, that’s what you’ll need for a 20% home loan deposit, October 2023
Superannuation insights:
- Super blind spots: Most Aussies don't want their money locked up, should they be able to access superannuation early?
- Younger generations are feeling in the dark about their superannuation, as it seems super funds just aren’t speaking the same language.
- When you select a super fund, you're essentially deciding which company or organisation will manage your money. So what are your options?
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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