Mozo Banking Round Up, September 2020

By Peter Marshall ·

Although we are yet to hear the RBA’s decision as to whether they will be reducing the cash rate, many lenders are getting in early, making cuts to their fixed and variable rate home loans and trimming their savings rates. 

It was also an interesting month for credit cards, as two of the big four banks launched a new credit card, both resembling a ‘Buy Now, Pay Later’ (BNPL) product. While the other two big banks are yet to make a move, it’s safe to assume that the big banks are trying to keep up with the competition. 

For a more detailed look at all the banking changes the Mozo database recorded in the last month, read on for this month’s installment of the Mozo Banking Round Up.

Key facts

Even as we wait to see if the RBA will give in to temptation and cut the cash rate once more next week, lenders are cutting both variable and fixed ​Home Loan​ rates ever lower.

Two big banks launched very similar ​Credit Cards​, both styled more like ‘Buy Now Pay later’ products than traditional cards. We also saw the end of the last dual card accounts and the return of some Velocity rewards cards.

A mixed bag for ​Personal Loans this month with some cuts and some increases. One of the big 4 lifted its unsecured rate while another launched a large limited time discount.

No waiting around for the RBA on ​At Call Deposit rates either - 3 of the big 4 banks cut rates, along with a number of providers that have had the best rate available at one time or another.

Many of the providers tracked in the Mozo database made cuts to Term Deposit rates last month, driving the average 12 month rate down 7bp.

Home Loans

Rates continue to edge downwards with a mix of variable offers, and improved fixed rates. The best fixed rates are still found in the one and two year terms, but three year rates are not far behind and a frequent price leader has hit the market with a new offer.

For an owner occupier loan of $400,000 making P&I repayments the average variable rate is 3.33%, for 1 year fixed it’s 2.55%, for 2 years fixed it’s slightly lower at 2.50%, and for 3 years it’s 2.57%. Then it’s a step up to the 4 year average rate at 2.91% and the 5 year at 2.94%.

Variable Rates

Athena ​Home Loans cut its variable rates between 5 and 15bp, depending on LVR and borrower type. Owner occupier rates now start from 2.34% (comp rate 2.34%*) and investor rates from 2.69% (comp rate 2.69%).

Bank of Queensland
​cut rates on its Economy Home Loan, now starting from 2.59% (2.76% comp rate*) for LVR’s under 70%.

Commonwealth Bank
cut its lowest home lending rate during September by 10bp. For owner occupiers, the new rate is 2.69%, LVR <80%. (2.70% comp rate*).

HSBC
trimmed 6bp off owner occupier rates for its Home Value Loan, now at 2.59% (2.60% comp rate*).

ING
​cut 10bp from selected tiers on both its Mortgage Simplifier and Orange Advantage Package products, for owner occupiers paying principal & interest. At 80% LVR, the packaged rate is now priced at 2.64% (2.98% comp rate*).

Well Home Loans
​reduced its leading variable rate by 15bp to 2.17% (2.20% comp rate*), placing it firmly at the pointy end of the market.

Yard
​’s Variable Home Loan Special rate was cut by 20bp to 2.19% (2.22% comp rate*).

Fixed Rates

AMP reduced its Professional Package 2 year option to 2.19% (3.13% comp rate*), down 20bp. 

Greater Bank
cut its 1 year fixed rates for owner occupiers by 10bp, now at 1.99% (3.53% comp rate*).

Homestar
introduced a 3 year fixed rate at 2.06% (2.38% comp rate*).

Hume Bank
cut its 2 year fixed rate by 15bp, now 2.04% (4.02% comp rate*).

Macquarie
​cut fixed rates on both its Basic and Offset loan options, with the 1 and 2 year rates down 21bp to 2.19% (1 year comp rate 2.69% for Basic and 2.97% for Offset, 2 year comp rate 2.65% for basic and 2.93% for Offset*) for owner occupiers, and down 45bp to 2.59% (1 year comp rate 2.97% for Basic and 3.23% for Offset*) for investors.

Tic:Toc
reduced its 2 year rate for owner occupiers by 18bp to 2.09% (2.35% comp rate*).

*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.

Credit cards

A big month in the Credit Card segment with the launch by two of the big four banks of new cards that do their best to look like Buy Now Pay Later services. Some credit cards already offer payment plans for particular purchases, but these are the first credit cards to charge no interest on all purchases.

American Express
has re-launched its Velocity Escape and Velocity Platinum cards, and reduced the bonus points offered on its Qantas Ultimate Card from 80,000 to 55,000.

Bankwest
dropped the purchase rate on its Breeze and Breeze platinum Mastercards, from 12.99% to 10.99%. Annual fees were also reduced on both cards by $30 with the standard card’s fee now $49 and the Platinum card’s fee now $69.

Citi
introduced a 0.90% for 15 months purchase rate on its Clear card and increased the 0% balance transfer period on its Rewards card from 26 to 30 months.

Hot on the heels of NAB’s announcement of its StraightUp card (below) ​Commonwealth Bank announced its intention to offer a similar product. Called Neo, the card is the same as NAB’s offer in many respects but there are a few differences. Commonwealth Bank charges higher monthly fees - $12 for a $1,000 limit, $18 for a $2,000 limit, and $22 for a $3,000 limit, and the minimum monthly repayment is more akin to a credit card at the greater of $25 or 2%. No foreign exchange or late payment fees apply. People can register their interest in the card but no launch date is known yet. The bank also extended the end dates for the bonus points offers on its Platinum, Diamond, and Ultimate Awards cards out to the end of April 2021.

Kogan Money
reduced the 0% for 18 months balance transfer offer on its Black Card from 18 to 12 months.

NAB
launched its StraightUp card which aims to be more like a Buy Now Pay Later service than a traditional credit card. The card has no interest rate, instead charging a monthly fee in each month the card is used or has an outstanding balance. The monthly fee varies depending on the credit limit chosen - $10 for a $1,000 limit, $15 for a $2,000 limit, and $20 for a $3,000 limit. There are no late payment or foreign currency fees. The NAB card has higher minimum monthly repayments than Commonwealth bank’s Neo card.

Westpac
no longer offers American Express cards following the termination of their partnership. The bank was the last to offer dual card accounts which had previously been common among the big four banks.

Personal Loans

A range of changes for Personal Loans in September but no clear pattern with some on the way up and plenty of cuts too, including a special offer from ANZ.

Alex​, which has applied for a Restricted ADI license, waived the $295 application fee on its unsecured personal loan for a promotional period.

ANZ
​has discounted rates on its Unsecured Personal Loan until December 2nd. The fixed option is down 195bp to 10.50% (comp rate 11.38%*) and the variable option 300bp lower at 12.99% (comp rate 13.86%*).

Auswide Bank
cut its fixed Car Loan rate by 100bp to 4.49% (comp rate 5.10%*).

Citi
trimmed the 3 year introductory rate on its Ready Credit line of credit from 6.90% to 5.90%.

People’s Choice Credit Union
reduced its fixed Car Loan rate by 100bp to 8.99% (comp rate 9.35%*).

Suncorp
increased fixed rates with its Car Loan up 230bp to 7.79% (comp rate 8.39%*) and its Unsecured Personal Loan up 100bp to 10.49% (comp rate 11.08%*).

Westpac
lifted the rate on its fixed Unsecured loan by 100bp to 11.99% (comp rate 13.15%*).

*WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. 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.

At-Call Deposits

Another month where At Call Deposit rates were cut heavily, including from 3 of the major banks and some previous rate leaders. 65 of the savings account cuts that Mozo tracks had rates reduced, and the average ongoing rate is 0.61%, 3bp lower than it was a month ago.

Australian Unity
​had the highest ongoing rate available briefly during the month at 1.75%, before cutting 25bp to 1.50%.

Commonwealth Bank
trimmed 5bp off its NetBank Saver intro rate, now 0.90%.

Heritage
​cut the introductory rate on the Online Saver by 30bp to 1.90%, previously the leader in the intro bonus category.

ING
​ cut its Savings Maximiser ongoing bonus rate by 15bp to 1.50%. NAB cut 10bp off both the ongoing bonus rate for its Reward Saver

(now 0.80%) and the intro rate on its iSaver (now 0.85%).

RAMS
took 20bp off the ongoing bonus rate of its Saver Account, now at 0.90%.

Westpac
​cut headline rates by 15bp, both the introductory rate on its eSaver and ongoing bonus rate on its Life account now at 0.85%.

Volt
​cuts its competitive unconditional rate from 1.65% to 1.45%, the highest amongst savings accounts with no hoops to jump through to receive a bonus rate.

*rate tables based on an account balance of $10,000

Term Deposits

Term Deposit rates continue to fall rapidly. Over the last month alone the average 12 month rate is down 7bp to 0.84%. 56 providers tracked by Mozo made cuts to term deposit rates including each of the four major banks.

ANZ
’s leading offer was 1.00% for 8 months but now 0.85% for 10 months. ​Commonwealth Bank ​cut between 5 to 10bp from most rate options. ​NAB made cuts of between 5 and 15bp for all terms, similarly ​Westpac ​reduced rates 5 to 15bp across all terms.

The larger rate movements from the rest of the market include: AMP ​cutting 10 to 25bp across the board, ​Australian Military Bank (20-25bp), ​Australian Unity (5-40bp), ​Bank of Sydney (20-36bp), Credit Union SA (5-15bp), ​MyLife MyFinance (25bp), ​Qudos Bank (30bp), ​RACQ Bank ​(5-30bp), ​Southern Cross Credit Union (15-30bp), and ​Teachers Mutual Bank​ (15bp).

*rate tables based on an deposit of $25,000

The content of this report is produced using Mozo's extensive database of banking products, which is updated every day.

If you'd like access to more detailed information, please contact us at ​data.services@mozo.com.au.