Mozo Money Moves: Inflation climbs, borrowing caps tightened, first home buyer restrictions, and a hack to save $100k on your home loan

This week in Australian finance was dominated by regulatory intervention and stubborn inflation data. Australia's financial safety regulator took action to pre-emptively cap the growth of riskier mortgages, a move swiftly echoed by Australia’s largest bank in its treatment of complex trust lending. Meanwhile, official October inflation figures surprised the market by increasing more than expected, largely driven by soaring housing and electricity costs, confirming that the prospect of a Christmas interest rate cut is now firmly off the table. As consumers head into the Black Friday sales weekend, forecasts suggest a shift toward intentional, value-driven spending, while Mozo provides critical data on how homeowners can save over $100,000 by slightly adjusting their repayment frequency and amounts.

Inflation jumps to 3.8%: rate-cut hopes dashed

New data from the Australian Bureau of Statistics (ABS) puts an end to any lingering hope of a December interest-rate cut. The headline Consumer Price Index (CPI) rose 3.8% over the year to October, up from 3.6% the month before. Underlying inflation (the trimmed mean) also moved up, from 3.2% to 3.3%, staying firmly above the central bank’s 2-3% target band.

Most of the pressure is coming from housing-related costs, with the housing component climbing 5.9% over the past year. Energy bills, especially electricity, stood out with electricity costs surging 37.1% year-on-year, as state government rebates expired and timing effects from the Commonwealth relief fund faded. Such extreme jumps in non-discretionary costs can create serious strain for household budgets, making the persistence of high inflation not just about volatile items, but entrenched structural pressures.

Domain senior economist Joel Bowman described the data as “another clear sign that the RBA is unlikely to cut rates in December,” adding that households “will need to adjust to a period of high rates, at least until inflation shows more convincing signs of easing.” With inflation this stubborn and broad-based, the odds of a rate cut this year have evaporated. The latest figures underscore that rate-setting decisions are likely to remain data-driven, as the central bank grapples with deep-rooted cost pressures rather than temporary spikes.

Home loans: variable rates fall, fixed rates mostly rise

Aussie Home Loans has trimmed its Select Basic Variable rates for owner-occupiers paying principal and interest, with most loan-to-value ratio (LVR) tiers seeing a 0.25% p.a. drop.

Investors, however, are facing a mixed bag. While most variable rates for principal and interest or interest-only repayments dropped by 0.25% p.a., one standout was Aussie Home Loans’ investor P&I loan for LVR 80-90%, which actually rose 0.15% p.a.

Fixed home loans are moving in the opposite direction, with some lenders lifting rates. AMP Bank’s Offset Fixed Home Loan (Professional Package) for owner-occupiers with LVR under 60% saw its 1- and 2-year fixed rates climb by 0.15% p.a. Meanwhile, the Bank of Queensland made the biggest jump this week, with certain investor P&I products under 90% LVR seeing a 0.50% p.a. increase on the 3-year fixed.

Leading variable rate home loans on Mozo

Banks cull sub-5% home loan deals

ME Bank and Commonwealth Bank have become the latest lenders to axe their sub-5% fixed home-loan offers, in what appears to be a retreat from the short-lived “under-5” era.

This week, ME Bank confirmed it will no longer offer its 4.99% p.a. two-year fixed loan, a product launched only months earlier. Commonwealth Bank also quietly scrapped its own 4.99% p.a. two-year fixed offer for low-LVR owner-occupiers. That deal was rolled out in September and was seen as a rare big-bank signal that sharper fixed rates might be returning, but the window closed abruptly in late November.

The shift doesn’t stop there. Westpac and Macquarie had already moved their lowest fixed rates back above 5% p.a. earlier in the month, effectively leaving no major bank still advertising a fixed rate with a “4” in front. Several regional and non-bank lenders may still offer rates below 5% p.a., though these are now more limited and often reserved for those with strong equity.

For borrowers hoping for end-of-year relief, the move away from sub-5% fixed rates suggests competitive pressure in the fixed-rate market has already peaked. With inflation proving stubborn and banks adjusting to the likelihood of a longer period of higher funding costs, big-bank “specials” may remain firmly off the table for some time.

Bank halts pre-approvals amid first-home buyer surge

Beyond Bank has temporarily halted all home-loan pre-approval applications, effective immediately, as demand from first-home buyers rises sharply. The pause comes amid a surge of interest driven by the federal government’s 5% Deposit Scheme, which has made entering the property market more accessible for first-time buyers.

News Corp was sent an email from Beyond Bank, received last week by Home Loan Headquarters mortgage broker Dwayne Nicholls, confirming the change would take effect “immediately”. The bank said that applications for loans where a contract of sale has already been signed are not affected, but new pre-approval requests will be temporarily suspended while it manages the high volume of applications.

Mortgage brokers are urging prospective buyers to act quickly. Options include contacting a broker early to explore alternatives or moving directly to conditional approval if a suitable property is found. Analysts warn that other lenders could also tighten pre-approval access if the current surge continues, potentially adding pressure to an already competitive market.

Regulator’s cap targets borrowers with higher debt

The Australian Prudential Regulation Authority (APRA) has moved to rein in riskier home lending, introducing a new cap on high debt-to-income (DTI) mortgages to prevent financial vulnerabilities from building up in the system. From 1 February, Authorised Deposit-taking Institutions will be limited to writing no more than 20% of new loans at a DTI of six times or higher. The limit is applied separately to owner-occupier and investor lending, signalling a targeted approach rather than a blanket clampdown.

The regulator says the step is necessary after a pick-up in high-DTI lending, particularly among investors. Rising household indebtedness and firming property prices flagged a turn in the credit cycle that APRA says needed early intervention.

There are exclusions for bridging loans and lending tied to new housing construction, in an effort to prevent supply bottlenecks and routine transactions from being disrupted. While the cap isn’t expected to restrict credit immediately, it’s likely to have the biggest impact on investors who tend to borrow at higher multiples.

The move lands at a time when the RBA is keeping interest rates steady and inflation remains sticky. By acting during a relatively stable rate environment, APRA is putting structural guardrails in place before the next easing cycle, when credit demand typically accelerates.

CBA tightens lending to company and trust borrowers

CBA has followed APRA’s lead on tightening credit standards, introducing new restrictions for borrowers using company and family trust structures. The move mirrors an earlier shift by Macquarie Bank and signals a broader push across the sector to curb riskier high-leverage strategies.

Effective immediately, applicants using company or trust structures will need to show they already have a lending relationship with CBA – such as a home loan, business loan, personal loan or credit card – for at least six months. That rule aims to slow fast-track borrowing and limit the onboarding of high-risk customers through brokers and complex investment setups.

These structures have been popular with experienced property investors because they can stretch borrowing power and allow larger loans to sit outside the individual’s name. But lenders have become more cautious after concerns about over-leveraged strategies promoted online and the use of trusts to accelerate borrowing without the same scrutiny applied to standard home loan applications.

By forcing borrowers to have an established relationship with the bank, CBA is effectively closing a loophole that allows investors to push their debt capacity higher without the same visibility. Combined with APRA’s move on high debt-to-income lending, it suggests major banks are acting early to tighten the flow of higher-risk credit and reduce the potential for concentrated lending in the next phase of the credit cycle.

Borrowers can save $100k by changing how they repay

Mozo’s latest analysis shows a repayment strategy that can save homeowners more than $100,000 in interest and take years off their loan term. The key isn’t just switching from monthly to weekly or fortnightly repayments, but splitting the full monthly repayment and effectively paying extra into the loan each year.

Because interest on a home loan is calculated daily, reducing the outstanding balance more frequently means less interest accumulates. By dividing a monthly repayment into two fortnightly payments or four weekly payments, borrowers end up making the equivalent of 13 monthly repayments each year – without feeling like they’re stretching their budget.

On a $700,000, 25-year principal and interest loan at 5.50% p.a., the savings are significant. Splitting the monthly amount into fortnightly or weekly repayments can save more than $100,000 in interest and cut the loan term by close to four years.

But there’s one trap to avoid. If a lender simply recalculates the minimum repayment when switching to weekly or fortnightly, the savings fall away. In the same $700,000 example, the interest saved could drop to less than $1,000 if the repayment amount isn’t manually adjusted.

The big takeaway is that it’s the extra repayment built into the structure that delivers the savings. Paying more into the principal each year, not just changing the frequency, is what drives the six-figure interest reduction.

Black Friday forecast: fewer shoppers, bigger spends

New forecasts point to a shift in how Australians are approaching the Black Friday and Cyber Monday sales. ING-commissioned research anticipates total spending to edge up to more than $12.7 billion this year – a modest increase of about $55 million. But while the overall spend is rising, fewer people are actually shopping. Participation is tipped to fall by about 9%, with just under half of households planning to take part.

The message is that shoppers are becoming more selective. Rather than impulse buys, those hitting the sales are planning bigger, higher-value purchases and using the discounts to stretch their budgets further. The top spending categories reflect this shift: homewares, furniture, clothing and everyday essentials such as laundry detergent and toilet paper. Bulk necessities showing up in a major discretionary sales event is a clear sign that households are using the sales as a strategy to manage ongoing cost-of-living pressures.

Younger shoppers are driving the spending. Almost 8 in 10 Gen Z and around two-thirds of Millennials are expected to take part, compared with only 16% of Baby Boomers.

Retailers remain upbeat despite the change in behaviour. Nearly 80% expect a strong festive season and most are starting their sales earlier in November, signalling that the Christmas shopping period now effectively begins this month.

Bank Australia expands with Australian Unity takeover

Bank Australia has officially finalised its acquisition of Australian Unity’s banking operations, bringing 29,000 new customers into its fold. The move lifts the bank’s total customer base to more than 320,000.

Bank Australia managing director Damien Walsh said the acquisition is a key part of the bank’s strategy to grow its scale, strengthen its impact, and improve the customer experience. Former Australian Unity Bank customers now have access to Bank Australia’s full suite of products and services.

Following regulatory approval, Australian Unity Bank customers have been migrated to Bank Australia’s systems, gaining access to new digital banking tools and customer service channels.

What former Australian Unity Bank customers need to do:

• Log in to internet banking: Use your new Bank Australia customer number and your existing password. You must update your password on the first login.
• Download the mobile app: Get the app from the App Store or Google Play after updating your internet banking password.
• Update payments: While existing direct debits continue, update the BSB (313-140) and account number for any new or ongoing payments to prevent disruptions.

For more info, customers can visit bankaust.com.au or contact the customer service team.

Retirement savings at risk after SMSF advice review

The quality of advice in Australia’s $1 trillion self-managed super fund (SMSF) sector is under the spotlight, with the Australian Securities & Investments Commission (ASIC) uncovering widespread failings that could threaten retirement savings.

A review of 100 SMSF advice files found 62% did not meet the legal duty to act in clients’ best interests, and 27% involved advice that posed a real risk of financial harm. Only 38% fully complied with the law.

SMSFs now make up around a quarter of Australia’s $4.3 trillion super pool. ASIC Commissioner Alan Kirkland warned they aren’t suitable for everyone, due to cost, complexity and lost safeguards such as prudential oversight and AFCA complaint rights.

Poor advice can push retirees into high-risk or unlisted assets, including property development, increasing systemic risk. With more wealth moving outside traditional protections, high-quality guidance is essential. Past failures, like Shield and First Guardian, show the stakes are real.

Prepare your home insurance for summer hazards

As Australia enters its high-risk summer period, Allianz is reminding homeowners to check their property and insurance cover before heading off.

Simple maintenance can reduce the risk of major loss. Turn off the main water supply to prevent burst pipes, inspect flexible hoses for leaks or wear, and unplug unnecessary appliances to reduce fire risks.

It’s also vital to review your Product Disclosure Statement (PDS). Watch for the 72-hour exclusion, which can void cover for certain weather events if a policy is taken out or increased too late. Extended absences can also trigger the Vacancy Limit – homes left unoccupied for more than 60 days may not be covered unless agreed in writing.

Regular upkeep and a current contents inventory are essential to ensure claims are valid and smooth if something goes wrong while you’re away.

Allianz has released its first preventative Summer Risk Report. This free, online resource includes handy tips and tricks to help Aussies better prepare themselves and their homes.