Mozo Money Moves: Fixed rates falling, RBA stresses economic challenges, house prices to rise, savings strategies, and SME solutions

Welcome to Mozo Money Moves, your weekly guide to the shifts shaping your money. This week’s wrap covers both relief and reality: while fixed home loan rates have tumbled below 5% and borrowers enjoy cheaper repayments, the RBA’s minutes warn of slowing productivity and modest long-term growth. We also unpack a surge in home loan demand, the government’s expanded Home Guarantee Scheme, and new comparisons across savings accounts, term deposits and super funds. Plus, we look at fresh offerings from ING and OFX that could help boost rewards and protect small business margins.

Let’s dive in.

Home Guarantee Scheme expanded, draws criticism

The federal government is widening access to its Home Guarantee Scheme (HGS) with a suite of new measures aimed at helping more Australians into the property market. Under the scheme, Housing Australia provides a guarantee to participating lenders, allowing borrowers to take out a home loan with a deposit as low as 2% to 5%, while avoiding the added cost of Lenders Mortgage Insurance (LMI).

From 1 October 2025, the expanded rules will introduce several key changes. The annual cap on the number of scheme places will be scrapped, making it easier for more buyers to qualify. Income thresholds for applicants will also be removed, opening the program to a broader range of households.

Property price caps will be lifted significantly as well. In Sydney, the limit will climb to $1.5 million, while in Melbourne it will rise to $950,000. Meanwhile, the Regional First Home Buyer Guarantee will be folded into the broader First Home Guarantee, streamlining access for those purchasing in regional areas.

The reforms are designed to lower barriers to entry for aspiring homeowners and position the HGS as a more affordable alternative to private LMI, since the government, rather than the borrower, bears the guarantee cost.

But the changes have not been welcomed by all. Critics caution that boosting demand in an already tight housing market risks driving up property prices. AMP chief economist Shane Oliver told SBS News the scheme is likely to be popular, but warned it could accelerate demand, push values higher and leave first-home buyers taking on bigger mortgages and heavier debt.

Home loans surge as AFG reports record activity

Australian Finance Group (AFG), which boasts a network of more than 4200 mortgage brokers, is seeing record demand for home loans as the housing market picks up.

AFG’s CEO, David Bailey, told the AFR that falling interest rates, strong buyer demand, and tight housing supply are keeping the market busy. In fact, the last three months of the year were particularly strong, with July 2025 marking the company’s busiest month ever, with over $10 billion in new loan applications.

For Australians hoping to buy a home, this could be good news. Lower interest rates make borrowing cheaper, while strong demand suggests sellers are still in a good position. But the high activity also reflects the ongoing challenge of limited housing supply, which may keep prices elevated in many areas.

Even with lower interest rates making borrowing cheaper, buyers are still competing for a smaller pool of homes, which can push prices up and make it harder for some first-time buyers to enter the market.

This supply squeeze is particularly noticeable in major cities and popular regional areas, where demand often outpaces the number of properties available. For homeowners thinking of selling, it could be an encouraging sign that the market remains strong, while buyers may need to act quickly or adjust their expectations when looking for their next property.

Chasing borrowers – fixed home loans dip below 5%

Fixed home loan rates have continued to slide throughout August, with several major banks trimming their offers and a growing number of lenders dipping below the 5 percent mark.

There are now 32 lenders in Mozo’s database with fixed rates under 5% p.a.

According to Mozo’s latest banking roundup, in the past month CBA lowered selected 3-year fixed rates by up to 45 basis points to 5.34% p.a. (7.13% p.a. comparison rate*), while HSBC dropped its 2-year fixed to 4.99% p.a. (5.69% p.a. comparison rate*). Suncorp’s best rate now sits at 4.79% p.a. (5.74% p.a. comparison rate*), and ubank cut all fixed terms by 30 basis points.

The shift hasn’t been confined to second-tier players. NAB trimmed its 2-year fixed to 5.19% p.a. (6.12% p.a. comparison rate*) and Westpac and its subsidiaries – St George, Bank of Melbourne and BankSA – made headlines by slashing their 2-year fixed products to 4.89% (5.88% p.a. comparison rate*), making Westpac the first of the Big Four to break below 5 percent.

For borrowers, the return of fixed rates starting with a ‘4’ could provide short-term certainty, even as questions linger over whether variable rates will eventually fall further.

2 year fixed home loan rate leaders

*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.

RBA minutes expose hidden productivity challenges

While borrowers are enjoying relief from the latest rate cut, the Reserve Bank of Australia's (RBA) August minutes reveal a warning about slowing productivity growth in Australia. The central bank revised its productivity forecast down from 1% to just 0.7%, lowering Australia's long-term trend growth rate from 2.0% to 1.7%. This is the long-term average rate at which the economy can grow without causing a sustained increase in inflation.

This translates to an estimated $30 billion reduction in economic output over two years – a somber reminder that low interest rates are not a cure-all for the economy's structural issues.

Quick facts:

For Australians, this means that while mortgage repayments are lower in the short term, real wage growth and overall living standards may remain modest. The RBA stressed that future rate changes will remain data-driven, with decisions depending on inflation trends, employment figures, and global economic conditions.

CBA economists say 'don't overreact' to inflation shock

Following a stronger-than-expected July inflation reading, CommBank economists have issued a new analysis , but they're not panicking. While headline inflation rose to 2.8% and trimmed mean (underlying) inflation reached 2.7% year-on-year, the bank attributes much of the increase to temporary "quirks". According to CBA, the surge was likely driven by the timing of electricity rebates and holiday travel costs, factors that are unlikely to persist.

CBA Economist Harry Ottley said the RBA has previously cautioned against overreacting to monthly CPI volatility, and the July data is unlikely to change its data-dependent approach. He added that a 25 basis point rate cut in November remains the most likely next move.

The bank's view is that the economy is on a path to a soft landing and that the RBA's current monetary policy is working as intended.

Mozo side-by-side provider comparisons

Mozo recently kicked off a new series of head‑to‑head comparisons, pitting financial products against each other. This week’s side-by-side showdown features term deposits and super.

Savings showdown: Judo Bank vs Big Four banks

Analysing the term deposit market exposes a battle of wills between smaller providers, like Judo Bank and the Big Four – NAB, CommBank, Westpac, and ANZ. While the major banks offer the recognition and reputation of a household name and a broader branch network, Judo Bank leans on competitive short-term rates and a low entry point to attract savers.

Here’s a quick provider breakdown of key differences, rates and minimum deposits:

The verdict: Judo Bank offers stronger returns across most short-term deposit products, and its $1,000 minimum deposit makes it more accessible to a wider range of savers. However, the big banks' large customer bases and familiar services will likely continue to attract those who prefer the comfort of a major institution.

See the full comparisons below:

• Judo Bank vs CommBank term deposits
• Judo Bank vs ANZ term deposits
• Judo Bank vs NAB term deposits
• JudoBank vs Westpac term deposits

Super showdown: Aware Super vs UniSuper

Aware Super and UniSuper are two of Australia's largest profit-for-member super funds, both with strong track records and a background in serving professionals. Mozo senior writer Brad Buzzard has pitted these providers against each other to see which fund comes out on top.

The verdict: While both are highly regarded, the best choice depends on your investment style. Aware Super offers a more "hands-off" approach with its lifecycle strategy, while UniSuper offers greater flexibility for those who prefer to build their own portfolio from scratch.

Bonus vs unconditional savings accounts

As the RBA continues its rate-cutting cycle, the debate over bonus vs. unconditional savings accounts becomes even more relevant for savers. These two account types have very different approaches, and choosing the right one for you depends on your saving style.

• Bonus savers. These accounts offer a high headline rate, but it's typically conditional on meeting a set of monthly criteria, such as depositing a minimum amount, making a certain number of card purchases, or avoiding withdrawals. If you meet the requirements, these accounts can offer high ongoing rates. However, miss a single requirement, and your rate can drop to a very low base rate or to zero.
• Unconditional savers. These accounts have no hoops to jump through. You simply deposit and earn interest, with the rate typically determined by your balance. While their ongoing rates are often lower than a bonus account's maximum rate, they provide simplicity and predictability without the stress of meeting monthly conditions.

The recent rate cuts highlight the key trade-off: a bonus saver may hold up better in a falling rate environment, but the risk of missing a condition and earning a near-zero base rate increases. An unconditional account offers stability, which may be more appealing as rates continue to fall.

ING Pocket Perks: a simple approach to cashback

ING has launched a new feature called Pocket Perks, an automatic cashback program for its customers. Instead of a complicated points system, the program is designed to work automatically in the background whenever you use an eligible ING card at a participating retailer.

Pocket Perks is available to customers with either an Orange Everyday debit card or an Orange One credit card and includes more than 80 brands, from Chemist Warehouse to Petbarn. The cashback is credited directly to your account, usually within seven days (terms and conditions apply).

The program's key appeal is its "set and forget" approach. There is no need to activate offers or track points. For Aussies who have a wide range of loyalty schemes to manage, ING's program is a sign of a new trend – rewards that are simple, automatic, and provide tangible savings.

OFX’s digital solution helps SMEs lock in exchange rates

Foreign exchange service OFX has launched a new "digital Forward" service designed to simplify the accounts payable process for Australian small to medium-sized businesses (SMEs). This new platform allows SMEs to lock in foreign exchange rates for future transactions for up to 12 months, which helps protect them from currency volatility and unexpected costs.

The service is particularly relevant as OFX reports nearly 90% of Australian SMEs have some form of international operation. The key feature of the new platform is its automation: when a payment is due, the platform automatically draws down from the pre-locked rate, eliminating the manual process that was traditionally required.

According to OFX chief executive officer, Skander Malcolm, the new digital Forward offers a tangible benefit to SMEs in an uncertain economic climate by allowing them to take costs out of their business and protect their margins. The service is also backed by OFX's 24/7 specialist support, making sophisticated currency solutions – previously only available to large corporations – accessible to a much broader market.