Mozo Banking Roundup June 2019
Monday 01 July 2019
After starting June with the Reserve Bank cutting interest rates to a record low 1.25%, there’s a lot to cover in this edition of the Mozo Banking Roundup.
The RBA rate cut affected home loans and savings rates in a big way, with many banks and credit unions passing on the cut to both borrowers and savers.
Add to that all the usual ups and downs across a database which totals more than 1800 products across over 200 providers, and there’s plenty to seek your teeth into. Just keep in mind, these are the changes until 30th June 2019 and in the fast moving market, may not be accurate after that date. You should check product information before making an application or going ahead with an offer.
Get up to date with all the changes from the past month below:
- Lenders have been busy responding to the reduction in the official cash rate byslashing home loan rates. Of those tracked in the Mozo database 44 have passed on the full cut, 27 passed on part of the cut, and 17 are yet to move so far. While everyone has been watching variable rates though, it’s fixed rates where the real action is.
- Only two providers have cut purchase rates on credit cards thus far and only one of those by the full 25bp. Several card issuers have changed their terms and conditions so that customers with an outstanding balance transfer amount can still be eligible for the interest free period on purchases.
- As in credit cards, we’re yet to see much movement in personal loan rates, however three mutual banks and one online lender have sharpened rates.
- Rates for savings accounts are dropping quickly, but the best introductory and ongoing bonus rates are both down only 10bp from where they were a month ago. Unconditional base rates are under pressure and has us asking if a savings account is a savings account if it has a 0% rate.
- Term deposit rates have fallen much farther than the cash rate this year, perhaps suggesting that banks believe that more cuts to the cash rate are inevitable, and sooner rather than later. Longer term rates are no longer the best with the top 5 year rate now worse than the best 1, 2, 3 and 4 year rates.
Following the first change to the official cash rate in almost 3 years, expectations were high that lenders would pass on the full rate reduction to mortgage customers. So far the average rate cut sits at 23bp and around one third of those that have adjusted variable rates so far passed on the full cut.
If fixed rates are any indication, lenders are expecting at least one more cut by the RBA, and possibly more. Fixed rates are edging down under the 3.00% mark, the first of which was for a one year term, but there are now also 3 year options at 2.99%.Key Changes - Variable Rates
- Some of the first to announce rate changes following the RBA’s June cash rate decision were the Big 4. ANZ offered an 18 basis point cut across all variable rates, Commonwealth Bank and NAB passed on the full 25bp, while Westpac split the difference with a 20bp reference rate reduction.
- There were 44 home lenders in total keen to pass on the entirety of the rate cut, including major brands such as: AMP, Aussie, Bank Australia, Bank of Queensland, Bankwest, bcu, Beyond Bank, Citi, CUA, IMB Bank, ING, Macquarie, ME, RACQ Bank, and UBank.
- A total of 27 lending institutions only applied a portion of the rate cut, the average of which being 19bp and the smallest was 15bp. Notable inclusions were: Bendigo Bank (-20bp), Heritage Bank (-20bp), HSBC (-22bp), loans.com.au (-20bp), RAMS (-20bp), St.George brands (-20bp) and Suncorp (-20bp).
- Additionally, we are tracking 17 banks, credit unions and other lenders who have yet to apply or announce across the board rate reductions following the Reserve Bank decision.
Key Changes - Fixed Rates
- Bank of Queensland and Virgin Money introduced discounted 2.99% for 3 year fixed rates during June, representing 40 basis point cuts from their previous 3.39% rates.
- Greater Bank cut rates across most options from 10 to 50bp, the largest discounts towards short term rates. Its 1 year rate now equal lowest in our database at 2.99%.
- loans.com.au cut its 2 and 3 year fixed rate offerings by up to 30bp. For owner occupiers, these two options are currently priced at 3.19%.
- NAB was the only one of the four major banks to make changes to fixed rates during the month, its 2 year fixed packaged rate dropping 20bp to 3.59%.
- UBank cut all fixed rates by 20 to 60bp, including the 1 year rate dropping to 2.99%.
So far just two lenders have reduced interest rates on their credit cards. Both of these are mutual banks with one passing on the full cut and the other 18bp. The other change worth noting this month is some card issuers changing balance transfer conditions so that interest free days are still available while there’s a balance transfer balance outstanding, including Macquarie, Myer and Woolworths.
- ANZ added a 40,000 introductory bonus offer on its Rewards Travel Adventure Card when $500 is spent in the first 3 months.
- Auswide Bank was one of the two banks in June that passed on the cash rate cut to credit cards, reducing the purchase and cash advance rates on its Low Rate Visa from 9.45% to 9.20%.
- Macquarie announced it will be removing the 3% international transaction margin come July 1st. It will also be capping cash advance balances to $1,000, reducing cash advance rates, and blocking credit card transactions to gambling and lottery merchant and allowing interest free days during balance transfer periods. Myer and Woolworths made similar changes.
- P&N Bank also cut the purchase rate on its credit cards following the cash rate decision, shaving 18bp from both its Visa Classic and Visa Platinum credit cards. Both these cards now 11.31% purchase rates.
- Westpac now offers the choice of a Velocity direct earning rewards program on its points earning cards in addition to Altitude and Qantas Points.
A handful of lenders have reduced personal loan rates, but the vast majority remained unchanged through June. Those that did reduce rates were mutuals, along with an online lender.
- Bank First cut 15 basis points from its unsecured personal loan options. Standard variable and fixed rates are now priced at 11.59% (12.64% comparison rate*), while its Green Personal Loan, for the purchase of environmentally friendly products, is priced at 9.20% (10.24% comparison rate*).
- loans.com.au cut 45bp from its New, Used (now 4.99%, 5.54% comparison rate*) and Clean (now 4.29%, 4.83% comparison rate*) Car Loans.
- Qudos Bank passed on the cash rate cut of 25bp in full to its Car Loan (now 6.84%, 7.05% comparison rate*) and Unsecured Personal Loan (now 11.39%, 12.44%* comparison rate).
- RACQ Bank introduced special pricing for its New or Used Car Loan (now 5.89% 6.44% comparison rate*, a reduction of 28bp), while its unsecured Personal Loan Special rate was cut from 12.95% to 9.54% (9.83% comparison*)
The top introductory and ongoing bonus rates are just 10 basis points lower over the last month, while the average cut to introductory rates was 24bp and the average cut to ongoing bonus rates was 22bp. There are quite a few base rates on at call savings accounts now at or below 30bp including some accounts offered by the big 4 banks, so it will be interesting to see how low they go should there be another RBA rate cut or two.
- ANZ cut 20 basis points from both the ongoing base rate (now 0.30%) and the 3 month introductory rate (now 2.10%) for its Online Saver account. The ongoing bonus rate on its Progress Saver was cut 20 bp to 2.20%, the base rate remains 0.01%.
- Commonwealth Bank reduced the NetBank Saver introductory rate to 2.20% (31bp cut), and the base rate to 0.30% (20bp cut). The Goalsaver ongoing bonus rate was cut 25bp to 1.40%, with the base remaining 0.01%
- NAB cut 25bp from the intro rate (now 2.30%) on its iSaver, and cut 20bp from the base rate (now 0.30%). It’s Reward Saver product ongoing bonus rate was reduced to 2.05% (-25bp) and base rate cut to 0.30% from 0.50%.
- Westpac’s eSaver introductory rate for the first 4 months was cut to 2.31%, with the base rate reduced to 0.30% (both represent 20bp cuts). For it’s Life account, the ongoing bonus rate was reduced from 2.30% to 2.10%, with the base rate receiving the same 20bp cut to 0.80%
- The leading ongoing bonus rates following the cash rate reductions include Bank of Queensland’s Fast Track Saver account at 2.75% (previously 3.00%), ME Bank’s Online Savings Account at 2.60% (cut 25bp), UBank’s USaver also at 2.60% (cut 27bp) and ING’s Savings Maximiser at 2.55% (reduced 25bp).
- At a balance of $10,000, the average interest rate in the Mozo database for online savings accounts is now 1.23%, the average ongoing bonus rate is 2.07%, and cash management accounts is now 0.44%.
Term deposit rates continued to tumble throughout June and there’s no sign that they’ve reached the bottom in this cycle yet. The average 6 month rate is down 19bp over the last month and 31bp since the start of the year. For the 1 year term the average has fallen 20bp during June and 43 bp since January.
Longer terms have been hit even harder, such as the average 5 year rate falling 29bp in the last month, but a massive 72bp since the start of the year. The best 5 year rate right now is lower than the top rates for any term between 1 and 4 years.
- ANZ cut term deposits across the board by 15 to 25bp, Commonwealth Bank reduced many terms 10 to 35bp, NAB cut 10 to 25bp on all terms, while Westpac cut 25 from most rates, ramping up to a 50bp cut on its 5 year term.
- The largest sweeping term deposit cuts were seen from Arab Bank Australia (50-80bp), Australian Unity (30-65bp), Bank First (30-55bp), Bendigo Bank (5-55bp), Credit Union SA (5-60bp), Greater Bank (30-55bp), HSBC (10-45bp), IMB Bank (10-100bp), Macquarie (25-30bp), P&N Bank (15-40bp), Qudos Bank (15-50bp), Rabobank (25-40bp), St.George (25-50bp), Suncorp (10-30bo), Teachers Mutual Bank (15-35bp) and UBank (30bp).
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