Mozo Banking Roundup March 2020

Peter Marshall

Wednesday 01 April 2020

To say March was a busy month for banking would be an understatement. With the Reserve Bank making two cuts to the official cash rate, fixed and variable home loan interest rates have tumbled. 

We’ve also seen notable changes in personal loan rates, as leading car loan rates dropped even further. While this is good news for Australian looking to purchase a new vehicle, savers on the other hand have again drawn the short straw, as at-call deposit rates have continued to fall. 

For a more comprehensive look at last month’s banking changes, keep reading this month's Banking Roundup. 

Key Facts

  • Most lenders passed on the full amount of the first RBA cash rate cut in March. Following the second cut few adjusted variable Home Loan rates, with most switching focus to fixed rates.
  • A major bank removed several Credit Card options from its range, and we saw some other range and offer changes that may have been driven by current events.
  • Some providers cut Personal Loan rates this month including the Car loan rate leader dropping even further, and two of the major banks introducing price cuts.
  • One of the neobanks stopped taking new deposits, but in other news At Call Deposit rates continue to fall, with some steep cuts from a couple of majors.
  • Overall, Term Deposits continued to slide, but 3 of the major banks introduced new offers at higher rates, which triggered a spate of rate increases from other providers.

Home Loans

As the cash rate headed toward zero last year there was much conjecture around how banks would manage net interest margins. For the first cash rate reduction in March, 70 lenders passed on the whole of that change to their variable mortgage rate customers, however for the second ‘emergency’ rate cut the response has been markedly different. Only a few lenders have reduced variable rates any further, instead introducing a raft of cut price fixed rate options. The average variable rate for a standard $400,000 owner occupier rate in the Mozo database fell from 3.68% to 3.50%.

Variable Rates

ANZ announced a 25bp cut for variable rates after the first RBA cash rate reduction, and a further 15bp following the second emergency reduction. Commonwealth Bank, NAB and Westpac also passed on the full 25bp for the first cash rate cut of the month, but did not reduce variable rates further, setting the tone for the rest of the market.

In total, 70 lenders in our database announced 25bp cuts in March, including majors AMP, Bank Australia, Bankwest, Bendigo Bank, CUA, ING, ME, St.George Group, Suncorp and UBank.

Fixed Rates

March also saw a flurry of fixed rates cuts, especially following the second RBA emergency board meeting decision. ANZ cut 49bp from its owner occupier 2 year fixed rates, Commonwealth Bank cut between 20 and 70bp across its entire range of fixed rates options. NAB made even greater reductions, reducing its fixed range 40 to 90bp, while Westpac cut between 10 to 100bp.

In total, 70 lenders cut fixed rates during March. Notable institutions include: AMP (up to 138bp), Bank Australia (up to 105bp), Bankwest (up to 60bp), Bendigo Bank (up to 140bp), Heritage Bank (up to 36bp), ING (up to 70bp), ME (up to 134bp), St.George Group (up to 70bp), Suncorp (up to 75bp) and UBank (up to 64bp).
For a $400,000 owner occupier fixed loan at 80% LVR, averages fell:

  • 38bp on 1 year terms (now 2.90%)
  • 32bp on 2 year terms (now 2.81%)
  • 31bp on 3 year terms (now 2.68%)
  • 27bp on 4 year terms (now 3.14%)
  • 23bp on 5 year terms (now 3.20%)

*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.

Home Loan Awards 2020 

Congratulations to the 2020 winners of Mozo Experts Choice Awards for Home Loans. Now in their seventh year, the Mozo Experts Choice Awards are a place where we highlight the products out in the market that we believe offer great value to Australians.

Home Lender Bank of the Year

We’ve long known that UBank offers competitive rates, but it was the breadth of their range that saw them take this prize. Their loans were chosen as winners in the Low Cost Home Loan, Fixed Home Loan, Split Home Loan, and Investor Fixed Home Loan. They were the only ADI to appear in the Low Cost Home Loan winner list.

Online Home Lender of the Year

Tic:Toc has made a name for itself with its great rates and loan application software, but as with UBank it’s the breadth of competitive offering that really made them stand out. In fact, Tic:Toc only missed out on a gong in one of the categories that had more than one winner!

Some Other Award Highlights

New market entrant Athena was acknowledged as the best new product launched in the last year, for its combination of rates and features. We also awarded it as the most innovative new loan, for its promise to always give existing customers the same rate as new customers, along with a loyalty discount.

Bank Australia scored Mozo’s first ever award for Best Green Home Loan, having the lowest rate and achievable environmental target.

This year the judges considered 436 home loans offered by 86 lenders. A total of 30 lenders were recognised across the 11 categories assessed for these awards.

There were fewer mutual organisations in the winner list this year with online lenders dominating some categories.

Credit Cards

A major bank streamlined its product range, and several card issuers responded to current events by adjusting or removing their travel focussed products and offers. We also saw a range of interest free balance transfer offers being adjusted during the month the most notable of which was Amex removing all such offers from its range of cards.

ANZ increased the 0% BT offer period on its Low Rate card from 15 months to 22 months and removed the 75,000 bonus Velocity points that had been on offer.
American Express removed the 0% for 12 months balance transfer offers that had been available across its range of cards.

Auswide Bank has already passed both RBA rate cuts onto its Low Rate Visa customers, dropping the rate from 8.70% to 8.20%.

Bank First cut the rates on its Visa Classic and Visa Platinum cards by 25bp, now 12.54% and 9.59% respectively.

Heritage Bank reduced rates on its range of cards by 25bp with the Gold Low Rate card now at 11.05%, and both its Classic and Platinum cards now at 17.24%.

Instead of offering both standard and platinum cards, Jetsar now offers just one. The new card has the same 19.99% rate as the old Platinum card, but a lower annual fee at $29 (waived for the first year). There’s a $250 Jetstar Travel Voucher on offer for new customers who spend $3,000 or more in the first 3 months, and a rewards program that gives 1 ‘Jetstar Dollar’ for every $200 spent.

Kogan Money boosted the 0% BT period on its Black card from 12 months to 22 months.

NAB withdrew a number of card options from the market. They were the Low Rate Platinum Card, Rewards Classic Card, and Qantas Rewards card. Both the Rewards and Qantas Rewards options continue in Platinum and Signature versions, while the standard version of the Low Rate Card is also still available.

Qantas Money increased the bonus points available on its Qantas Rewards Signature Card from 20,000 to 80,000 when $5,000 is spent in the first 3 months, and another 20,000 after the first year.

Virgin Money reduced the 0% BT period on its High Flyer card from 15 to 12 months.

Personal Loans 

One of the rate leaders for car loans dropped its rates even further last month, and two of the major banks made their personal loans cheaper.

Bank First cut unsecured personal loan rates by 25bp, now starting from 8.75% (8.96% comparison rate*) for its Green Personal Loan.

Commonwealth Bank dropped variable rates on its Unsecured Personal Loan to 11.50% (12.38% comparison rate*), a reduction of 2.40% for variable rates and 2.20% for fixed rates.

Goldfields Money cut rates by 25bp, including reducing its (new) Car Loan to 5.59% (6.22% comparison rate*) and its Unsecured Personal Loan rate to 12.59% (12.81% comparison rate*).

loans.com.au still has some of the lowest car loan rates in the Mozo database after reducing its range by 22bp. The Green Car Loan leads with a rate of 3.97% (4.51% comparison rate*), and the New Car Loan is now at 4.67% (5.22% comparison rate*).

NAB is waiving the $150 application fee on its unsecured Personal Loan for a limited time.

Qudos Bank cut its Car Loan rate by 25bp to 6.29% (6.50% comparison rate*), its Unsecured Personal Loan rate also by 25bp to 10.84% (11.89% comparison rate*), and its Qantas Points Car Loan rate by 10bp to 7.89% (8.10% comparison rate*)

*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 

Unsurprisingly, many at call savings rates have been cut in the past month, so we will just call out a few of the more noteworthy changes here. For all ongoing rates, averages fell 13bp to just 0.84%.

ANZ reduced the ongoing bonus rate on its Progress Saver by 35bp, now 1.25%.
BOQ has temporarily removed the bonus rate conditions on its Fast Track Starter Account (only available to people aged 14 to 24), and Fast Track Saver Account ensuring customers will receive the top rates on each until 31 August.

Commonwealth Bank’s cut of 25 bp to its Goal Saver ongoing bonus rate leaves depositors who meet the required conditions earning just 0.65%. Its NetBank Saver introductory rate was slashed by 60bp, now languishing at 1.05% for 5 months.
Macquarie has so far kept its introductory rate account at 2.65%, the best in our database, but increased the base rate by 100bp to 1.35%.

NAB cut headline savings rates by 25bp with the ongoing bonus account now at 1.25% and its introductory rate option at 1.30%.

Neobank Xinja put its Stash account on hold after launching with a 2.25% interest rate which attracted about $455m in deposits.

Term Deposits 

Throughout March there was a definite trend downwards for term deposit rates, across all terms. However since the second RBA rate cut and associated announcements that has slowed, and many providers have introduced rates for select terms that match or beat the special rates introduced by three of the four major banks. Average rates fell between 9 and 22 basis points across all terms, except the 12 month average which stayed steady due to the increase in the number of specials on offer.

Commonwealth Bank increased its 1 year rate by 60bp to 1.70% but rates for all other terms are down between 10 and 20bp.

Judo Bank continues to have the best rates for every term it offers, except for the 5 year option where it has ceded leadership to Rabobank. Shorter term rates are up - 3 months by 20bp, 6 months by 17bp, 9 months by 10bp and 1 year by 15bp. The two year option is down 5bp, 3 years down 10bp, 4 years down 15bp and 5 years down 20bp. Most rates are shown in the table on this page.

NAB took its 10 month rate up 65bp to 1.75%, while cutting all other terms anywhere from 10 to 30bp.

Rabobank improved rates across a number of terms. Its 6 month rate is up 20bp and its 9 month rate is up 40bp, both now 2.00%. The 3 year rate is now 1.80%, up 65bp, the 4 year rate is up 70bp at 2.05% and the 5 year rate is up 80bp to 2.25%.

The St.George Group added a special rate of 2.00% for 8 months, only available to people over the age of 65.

Westpac added a special rate of 1.70% for 7 months, and cut all other terms between 10 and 25bp.

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. 

Product details in the Market Snapshot are as at the end of the month and product changes referred to are changes since the start of the month, unless otherwise specified.

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