Mozo Banking Roundup August 2019

Peter Marshall

Monday 02 September 2019

Despite August being a quiet month for the RBA, it didn’t stop banks and other providers making changes across products from home loans, to savings. Many home loan lenders continued to slash their short and long term fixed mortgage rates - a subtle anticipation of another rate cut. 

And though last month we saw credit card providers making minor rate adjustments, in August, providers shifted bonus points offers and continued to alter purchase rates. We also welcomed a new entrant for savings accounts and witnessed term deposit rates continue to tumble. 

Mozo’s database covers more than 1800 products from over 200 providers, so get up to speed with this month’s key bank changes below.

Key points: 

  • Leading short and long term fixed rate Home Loans fall below 3.00% in anticipation of future cuts, while the variable rate market begins to calm.
  • There was a change in the structure of several Credit Cards bonus point offers, with three offers now being contingent on a period of loyalty.  Also, a handful of purchase rates were adjusted this month.
  • A few significant rate shifts and offers of fee waivers in Personal Loans with some mutuals reducing rates.
  • A new entrant joined the Savings Accounts space with a rate equal to the best-in-market. The market as a whole continued to shift downwards, matching the last two cuts from the Reserve Bank.
  • Term Deposits continue to tumble with even the best rates at the longest terms approaching a mere 2.00%. The premium for locking in rates for extended periods has disappeared over the past few months.

Home Loans

Cuts to variable rates continued through August as lenders played catch-up with the June and July RBA rate cuts. The falls we’ve seen over recent months in fixed rates have not slowed however, with a large number of rates across all fixed termsreduced further, particularly for the longer terms. The lowest 3 year rate in our database is down 16bp from last month, while the lowest 4 year is down 40bp and 5 year down 20bp. Leading fixed rates for all terms now start from under 3.00%.

Key Changes - Variable Rates

  • In reaction to the July cash rate cut, Teachers Mutual Bank and its subsidiaries made 20 basis point reductions across its range of variable rate home loans. It’s lowest available rate is now the unpackaged Classic Home Loan at 3.42% (4.46% comparison rate*).
  • Tic:Toc made small adjustments to it Variable Home Loan, cutting it’s leading rate 8bp to 2.99% (3.00% comparison rate*). This now positions it as the 5th lowest variable home lending rate in the Mozo database.
  • UBank cut selected UHomeLoan Discount Offers by 25bp. It’s owner occupied, principal & interest option is now priced at a competitive 3.09% (3.09% comparison rate*).
  • We observed further delayed reactions to the July rate cut in August, with a wide range of mutuals and second tier lenders reducing their variable rates. Cuts averaged 20bp, with some larger reductions for interest only options

Key Changes - Fixed Rates

  • AMP cut packaged fixed rates 16bp on 3 year fixed (now 3.13%, 4.29% comparison rate*), and 72bp on 5 year fixed (now 3.34%, 4.17% comparison rate*)
  • Bank of Queensland made reductions on the majority of its fixed rates in August, cutting between 20bp and 55bp on packaged, discounted, and unpackaged rates 3 to 5 years. It’s Discount 3 year fixed rate for owner occupier is now 2.99% (3.79% comparison rate*).
  • Bendigo Bank made reductions of up to 50bp on its range of fixed home lending options. A packaged 3 year fixed is now priced at 3.39% (4.16% comparison rate*).
  • Citi reduced its fixed rates by up to 160bp, flat pricing it’s owner occupier rates at 2.99% for 1, 2, 3 and 5 years.
  • Greater made further cuts to its longer term 4 and 5 year fixed terms, both down 40bp to 2.99% packaged (3.97% and 3.92% comparison rates, respectively*)
  • IMB also cut fixed cuts to bring them below the 3% mark. Reductions ranged 20 to 70bp, with is 3 year owner occupier rate now priced at 2.99% (3.51% comparison rate*).
  • RACQ Bank cut all of its fixed lending options by 9 to 50bp. The 3 year Choices Package rate now comes in at a competitive 2.80% (4.27% comparison rate*).
  • Well Home Loans cut 25bp from its 2 and 3 year owner occupier rates, making their new 2.74% rate (2.96% and 2.94% comparison rates respectively*) the lowest in the Mozo database for those terms.
  • St.George, Bank of Melbourne, and BankSA made sizable cuts to their fixed rates in August, reducing by up to 145 basis points and flattening rates for all fixed terms. For owner occupiers making principal & interest repayments, packaged rates are now all 2.99%, unpackaged 3.14% across terms 1 to 5 years.

*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 handful of credit card rate changes to report this month, including a major bank increasing purchase rates while cutting cash advance rates across most cards. 

In a move squarely aimed at improving customer loyalty, three bonus points offers introduced this month enforce a 12 month waiting period before points are made available. Expect to see these types of conditions become more widespread. 

Key changes: 

  • American Express increased the introductory Membership Bonus Points offer on the Explorer Credit Card from 50,000 points to 100,000 points and the Qantas Bonus Points offer on the Qantas Ultimate Card from 55,000 points to 100,000 points both with a $3,000 spend within 3 months.
  • ANZ increased purchase rates (by between 25bp and 145bp) and lowered cash advance rates (by between 75bp and 150bp) to a matching 20.24% for most credit cards (excluding the Low Rate card which retained its 12.49% purchase rate).
  • Bendigo Bank discontinued the RSPCA Rescue Mastercard which featured donations to the RSPCA Adopt a Pet program.
  • Citi altered the bonus points structure on the Signature Qantas Credit Card by adding additional points that are only earned after 1 year, while also increasing the points earned upfront.  Points were increased from 50,000 Qantas Points with a $2,000 spend within 90 days of approval to 100,000 Qantas Points with a $5,000 spend, and after 1 year of using the card there is an additional 50,000 points. Citi also lengthened the period for 0% interest on balance transfers on the Signature Qantas Credit Card from 6 months to 15 months.
  • Hume Bank added 2.00% to the cash advance rate on the Clear Visa Card and the Value Visa Card, changing them from 17.95% to 19.95%.
  • NAB altered the bonus point offer structure on Rewards Signature Cards by waiting 1 year before points are credited. They also increased the bonus points offered on the Rewards Signature Card from 90,000 to 120,000 NAB Points or Qantas Points, both with a $3,000 spend requirement within 60 days.
  • RACQ Bank decreased the bonus point offer on the Platinum Rewards Mastercard from 30,000 to 20,000 points with a $3,000 required spend within 60 days.
  • Virgin Money altered the bonus point offer structure on the Velocity High Flyer and Velocity Flyer Cards by adding additional points that are only earned after 1 year, while reducing the points available to earn in the initial 3 month period. The Velocity High Flyer Card now offers 25,000 points a month for the first 3 months if you spend $3,000, plus 25,000 points on the first anniversary. For the Flyer Card, it’s 20,000 points a month for 3 months with a $1,500 spend, and 10,000 points on the first anniversary.
  • Westpac removed the 0% interest on balance transfers for 18 months offer for the Low Rate Credit Card and introduced a $250 cashback promotion with a spending requirement of $800 within 90 days.

Personal Loans

The Big 4 banks continue to hold out on passing on any rate cuts to personal loan customers, although in August one of their subsidiaries did slash its car loan rate by 100bp. Most rate reductions this month were from mutuals, although a number of that cohort also implemented rate increases.

Key Changes

  • Bankwest reduced its fixed car loan by 100bp from 7.99% to 6.99% (7.76% comparison rate*).
  • Credit Union SA reduced fixed rate personal loans for vehicles up to 2 years old by 40bp from 5.99% to 5.59% (5.68% comparison rate*).
  • Heritage Bank increased the fixed Car Loan (Up to 5 years old) by 150bp from 5.49% to 6.99% (7.62% comparison rate*).
  • Illawarra Credit Union decreased fixed personal loans from 30bp for the Secured Fixed (new) loan from 5.90% to 5.60% (6.18% comparison rate*), and the used asset option which dropped 185bp from 7.49% to 5.64% (7.77% comparison rate*).
  • Liberty also increased the Drive Car Loan variable rate by 110bp from 5.89% to 6.99% (9.83% comparison rate*).
      NRMA lowered the interest rate for the fixed New Car Loan by 30bp from 5.99% to 5.69% (6.39% comparison rate*) and increased the fixed Used Car Loan by 74bp from 6.25% to 6.99% (7.70% comparison rate*).
  •  Police Bank increased its Fixed Car Loan by 70bp from 6.49% to 7.19% (7.33% comparison rate*).
  • Queenslanders Country Credit Union and Queenslanders Credit Union decreased the New Car Loan (up to 3 years old) variable rate by 100bp from 5.99% to 4.99% (5.59% comparison rate*). 
  • Suncorp increased the fixed Car Loan by 50bp from 4.99% to 5.49% (6.09% comparison rate*).
  • Westpac, St.GeorgeBank of Melbourne, and BankSA introduced an offer to waive application fees for unsecured personal loans, a saving of $195 for all but Westpac with an application fee of $250.

*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. 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.

Savings Accounts 

In the world of savings accounts, another ‘neobank’ made its deposit accounts available to a select group of users this month, with a competitive rate on its savings account. But in a world where fee-free bank accounts are fairly common it will need to do more to make its offering stand out from the pack. 

The top ongoing bonus rate has dropped 50bp since May, precisely in line with the change in the RBA cash rate.

Key Changes

  • Neobank 86 400 announced its deposit account pricing as part of its soft launch to early access users. The only fee to speak of on it’s Pay Account is a 1.50% international transaction fee. It’s Save Account comes with 2.50% ongoing bonus rate when $1,000 is deposited from an external source each month, 0.40% otherwise.
  • Commonwealth Bank sliced 5bp from its NetBank Saver introductory rate from 2.05% to 2.00% for 5 months. The reverting base rate remains at 0.15%.
  • Deposit rate cuts were observed across the whole Westpac family, with the main brand reducing the ongoing bonus rate of its Life account 15bp to 1.95%, and cutting the 5 month introductory rate on its eSaver product from 2.11% to 2.01%. The St.George, Bank of Melbourne and BankSA Incentive Saver ongoing bonus rate was cut 15bp to 1.60%, while the MaxiSaver introductory was cut 10bp to 2.15%. Finally, RAMS cut its previously market leading Saver Account from 2.55% to 2.35%.
  • A large number of cuts from smaller banks and credit unions continued to be observed, with the average base rate dropping 3bp to 0.50%, the average intro rate dropping 7bp to 2.16% and the average ongoing bonus rate dropping to 1.84%, down 10bp.

Term Deposits

The pace of reductions to term deposit rates has only barely slowed, with huge volumes of cuts recorded in each of the last three months. Only 13 institutions refrained from cutting rates in August. In the last week alone the average rate for a  1 year investment dropped by 5bp, though it’s the longer terms that are being hit hardest. The top 5 year rate is now 2.10% while as recently as the end of May it was at 3.00%. The best rate in Mozo’s database at the time of writing is 2.30%, available for your choice of 1, 3, 6, 9, 12 or 24 months.

Key Changes

  • Even more reductions from the Big 4, with ANZ cutting term deposits across the board by 5 to 20bp, Commonwealth Bank reduced many terms 20 to 30bp, NAB mid range terms 10bp, while Westpac cut all rates 20 to 40bp, with larger reductions on shorter terms.
  • The greatest across the board term deposit cuts were seen from Arab Bank Australia (20-35bp), CUA (10-25bp), Endeavour Mutual Bank (25bp), Gateway Bank (10-40bp), Heritage Bank (5-35bp), Hunter United (15-30bp), P&N Bank (15-40bp), People's Choice Credit Union (15-30bp) St.George, BankSA, and Bank of Melbourne (20-35bp).

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

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