Mozo Money Moves: Westpac forecasts rate cut delays, ANZ trims home loans and Commbank debuts ‘rate range’ for credit cards

This week, several major banks have made notable moves in the Australian financial landscape, as Westpac revised its forecast on when the Reserve Bank of Australia (RBA) may start cutting interest rates. Meanwhile, ANZ moved to reduce rates on one of its popular variable rate home loans, offering some relief to borrowers. The bank also hit a milestone in the number of depositors for its digital banking platform, ANZ Plus.

In other developments, Commonwealth Bank of Australia (CBA) is set to shake up its offerings with a new, tiered interest rate structure for one of its credit cards. Plus, a number of bank term deposit rates increased this week, particularly on shorter-duration deposits.

Westpac suggests February rate cut off the cards 

Westpac has updated its view on when it thinks the Reserve Bank of Australia (RBA) will start cutting interest rates. Previously, the bank forecast that a reduction in the cash rate could begin in February next year, but now expect the central bank to hold off until May.

Westpac’s forecast revision is owing to insights gleaned from the minutes of the November monetary policy meeting , where the RBA signalled that they're more likely to wait longer before making cuts because of stronger-than-expected economic conditions, like increased consumer confidence and a strong jobs market.

On a more positive note for borrowers, Westpac expects that when interest rate cuts do begin, they will likely come in quick succession, with back-to-back reductions anticipated in May and July. This marks a shift from their earlier outlook, which anticipated a slower pace of one cut every three months.

According to Westpac's chief economist, Luci Ellis, the approach is expected to mirror trends seen in other peer economies, where early cuts have been “front-loaded”. However, Westpac still forecasts the cash rate will reach 3.35% by the end of 2025.

It’s important to note that these forecasts are based on the assumption that things play out as predicted. If inflation doesn't fall as the RBA hopes, or if the economy doesn't slow down enough, the RBA may hold off on rate cuts for longer, which could mean bigger cuts later on.

Among the other Big Four banks, NAB shares Westpac’s view that the RBA is likely to start cutting rates in May, while Commonwealth Bank and ANZ are sticking to their forecast of a February reduction.

ANZ trims home loan rates

While the Reserve Bank may be seen to be delaying rate cuts, ANZ has moved ahead, reducing interest rates on its Simplicity Plus home loan. The bank has lowered rates by up to 0.15% p.a. across most loan-to-value ratio (LVR) tiers, providing some relief for borrowers. For example, the rate on a 60% LVR loan drops from 6.54% p.a. to 6.39% p.a., making it one of the more attractive offers among the Big Four, according to Mozo’s database.

The ANZ Simplicity Plus loan now breaks down as follows:

When it comes to variable rate home loans for owner-occupiers, it's important to note that these new interest rates are still far from the cheapest options. They rank more in the middle of the pack in the Mozo database.

ANZ’s digital bank numbers are surging upward 

ANZ also hit a significant milestone this week, with 875,000 customers now using its ANZ Plus platform, and around 30,000 more joining every month. Maile Carnegie, the bank's group executive for Australia Retail, shared the update in a recent article on ANZ Bluenotes.

Carnegie reaffirmed that ANZ Plus holds $16 billion in deposits, the same figure revealed in the bank's recent full-year results. With 875,000 customers on board, ANZ is now matching NAB's UBank in terms of customer numbers, while Bendigo and Adelaide Bank’s Up platform has topped one million users .

ANZ Plus has also launched an accounts overview section within its app , enabling users to link accounts from other banks through Consumer Data Right (CDR) data sharing, with permission granted by the account holder. Through ‘My Accounts’, customers will be able to see the transactions they have made within these shared accounts.

“Instead of having to flick between multiple apps or websites, our more than 800,000 ANZ Plus customers are the first in Australia to be able to use their banking app to see their consolidated accounts using Open Banking,” Carnegie said.

Commbank introducing 'rate range' on credit cards

Earlier this week, CBA revealed a unique change to the interest rate structure on one of its popular credit cards, effective from 10 December 2024.

The purchase interest rate on Commbank’s Low Rate credit card will range from 10.99% p.a. to 15.99% p.a. for new applicants. Previously, the card had a fixed rate of 13.99% p.a. for purchases.

This is the first instance of a ‘rate range’ on a credit card that we’ve come across in Australia. Exactly how an individual’s purchase rate will be determined remains unclear. It may be an evaluation of personal credit scores, transaction history, late payments and more, but CBA are tight-lipped with regards to specifics.

"We periodically review our card offering and seek to innovate where possible to maintain value and services," a spokesperson for Commonwealth Bank told Mozo.

Term deposits rate rises this week

Term deposit rates have risen this week, with several banks offering higher returns, particularly on shorter terms. Check out the list below to see the changes and use our term deposit comparison tables to measure the different ways you can stash your cash.

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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 here.

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