Mozo Money Moves: Hundreds of fixed rates and term deposits tumble like a house of cards

By Rachel Wastell · · 5 min read
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image of falling cards with piggy banks in the background to represent interest rates tumbling on the Mozo database

This week, the RBA held the cash rate steady at 4.35% as fixed rates and term deposits continued to tumble. ANZ Plus also extended its home loan cashback offer and the Mozo research team tracked the shift in term deposit averages and leading rates since the start of the year, after Commbank slashed rates.

RBA holds cash rate at 4.35%

This week, the Reserve Bank of Australia (RBA) kept the cash rate at 4.35% for the seventh meeting in a row, extending what has been a long and painful wait for borrowers desperate for rate relief. 

The RBA statement after the decision outlined that while inflation is heading down from the peak of 7.8% it reached in 2022, the board remains cautious and said it could take until 2026 before inflation returns to its target range of 2-3%.

“While the pause gives borrowers more breathing room, the RBA’s forecasts show we’re not out of the woods just yet,” says Rachel Wastell, Mozo’s personal finance expert. 

“It’s crucial that borrowers stay vigilant and not get ahead of themselves. The economy is benefiting from a boost from temporary residents like students and tourists, and that is propping up consumer demand, so the RBA is still uncertain about the risk of inflation once again rearing its ugly head.”

Fixed rates continue to tumble as ANZ Plus extends cashback offer

Despite the RBA holding the cash rate steady, the home loan market is buzzing, particularly with the cuts to  fixed rates being made across the Mozo database. This week, 11 lenders reduced their fixed rates for owner-occupiers paying principal and interest, namely: Adelaide Bank, Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank, UniBank, Police Bank, Regional Australia Bank, Aussie, Australian Military Bank, BankVic, and Newcastle Permanent.

Most cuts averaged around 15-30 bps across 1-5 year terms.  Aussie’s 35-65 bps cut across 2-5 year terms stood out, bringing all 1-5 year rates for its Select Basic Fixed (LVR 70-80%) home loan to under 6%p.a. for owner occupiers making principal and interest repayments.

“For those in the market for a home loan, now could be a great time to lock in a fixed rate,” says Wastell. “With lenders offering competitive rates starting with 5, borrowers have the chance to lock in rates around five and a half percent.”

According to the Mozo database, there have been 200 fixed rate cuts in September alone across owner occupier home loans, paying principal and interest with an LVR of 80%.

“The banks are adjusting their rates to stay competitive, especially in the longer terms, where they have the most opportunity to balance out the savings they’re offering now with the cuts expected to come through” explains Wastell. 

“If you’re thinking about refinancing, you might want to consider a split loan, where part of your loan is fixed and part is variable. This way, you can hedge your bets and potentially benefit from future RBA cuts without missing out on the comparably low fixed rates available now.”

For the average loan size of $640,998 (according to the latest lending indicators data), the leading fixed rates on the Mozo database (for owner-occupiers with an 80% LVR paying principal and interest as of 27 September 2024) are:

  • 1 year fixed: 5.74% (7.31% p.a. comparison rate*)The Capricornian - Fixed Premium Choice Home Loan
  • 2 year fixed: 5.49% (7.65% p.a. comparison rate*)Newcastle Permanent Special Fixed Rate Home Loan
  • 3 year fixed: 5.49%  (6.62% p.a. comparison rate*) Police CU - 3 Year Fixed Rate Home Loan
  • 4 year fixed: 5.59% (6.40%p.a. comparison rate*) HSBC - Fixed Rate Home Loan
  • 5 year fixed: 5.59% (6.35%p.a. comparison rate*) HSBC - Fixed Rate Home Loan

*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

In other home loan news, ANZ Plus extended its $2,000 cashback special home loan offer from the end of September to the end of March. Available for customers refinancing an eligible non-ANZ home loan that is greater than $250,000 before 31 March 2025.

Home Loan Insights:

Savings slashed: 218 term deposit cuts from 43 providers

Despite RBA Governor Michelle Bullock signalling no cuts in the immediate future, banks seem to be getting ready for a lower-rate environment. Mozo research has found that it’s not just fixed rates in the home loan space that are shifting, term deposit rates are also being slashed across the board. 

“In just one month, we’ve seen 218 term deposit cuts from 43 providers,” says Wastell. “It’s a sign that banks believe a rate cut could be on the horizon within the next 6-12 months.”

This week, Commbank and Westpac, along with Westpac’s regional brands, all removed special offers and reduced their top rates. Commbank’s 9-month special dropped to 4.75%, while its competitive 12-month offer of 4.50% is removed, leaving the maximum rate savers locking away their cash in a one year term deposit can get at 4.35%. 

Westpac cut its 11-month term deposit rate to 4.65% and discontinued longer-term specials across its regional brands. As a result, the 1-year term deposit rates on offer from the big four banks are now 4.50%p.a. from NAB and ANZ, 4.35%p.a. from Commbank and 4.00%p.a. from Westpac.

Earlier this year, term deposit rates were hitting their peak, with 6-month terms offering 5.30% p.a. and 1-year terms reaching 5.40% p.a. However, this trend has seemingly reversed. The best rates in the Mozo database have now dropped to 5.10% p.a. for 6 months and 5.00% p.a. for 1-year terms. 

“If you locked in a term deposit between March and July, you were sitting pretty, as banks were really competing for your cash - but that competition is cooling off now, as banks don’t want to commit to paying more than they need to, especially if they expect rates to come down.”

“Savers in the market for a term deposit should look to secure leading rates now. As banks anticipate rate cuts, we could see more cuts to these long-term interest rates.”

Savings Insights

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.

Disclaimer: Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice. Target Market Determinations can be found on the provider's website. While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo. 

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.