Mozo Banking Roundup October 2019
Friday 01 November 2019
With another RBA rate cut in October, there's plenty of changes to our database of products this month. Mozo maintains a database of more than 1800 products from over 200 providers, tracking the changes made to each one as they happen.
While home loan lenders weren't as enthusiastic about passing on rate cuts the third time around, rates are still falling, with online and challenger lenders leading the way.
But unfortunately for savers, lower home loan rates are being mirrored by dismal rates on savings and term deposits - though there are still some decent holdouts to be found for those who know where to look.
Get up to speed with the banking changes from October with our banking roundup below.
- While most lenders passed on smaller portions of the RBA cash rate for Home Loans than previous months, online lenders bucked this trend, making deeper cuts than their brick-and-mortar peers. Fixed rate borrowing continued to plunge.
- A selection of customer-owned banks adjusted Credit Card purchase rates downwards. Other card issuers are offering new promotional balance transfer and bonus point incentives.
- The changes in the Personal Loan market presented mostly cuts, some in response to the RBA cash rate fall, while others looked to entice new customers with larger special offer discounts.
- Leading Savings Accounts receive greatest share of cuts, now barely above 2%. Most banks cut interest at-call rates this month, leading to more record average lows.
- Further reductions across the board to Term Deposit rates, with the average slipping for the eighth month in a row. However, two smaller banks went against the grain with rate increases.
We have observed a diminishing response following the third RBA cash rate cut of the year, with an average cut of only 15bp in October. Previous standard variable home loan rates were cut in response to the RBA decision by 19bp in July and 22bp in June. With smaller overheads and the need to compete, online lenders were the most likely to pass on larger shares of the cash rate cut. For fixed rates, comparatively larger reductions were made to rates this month with 16 lenders cutting some fixed rates by 50bp or more.
Key Changes - Variable Rates
- For the third rate cut of the year, the big 4 were less keen to pass on a greater percentage of the prescribed 25bp cash rate reduction. ANZ offered a 14 basis point cut (cumulative 57bp for the year) across all variable rates, Commonwealth Bank reduced by 13bp (also 57bp cumulative), finally NAB and Westpac both cut by 15bp in this round of announcements (59bp and 55bp total for the year respectively)
- 8 home lenders passed on the full rate cut this time round, of these, half of these have cut 25bp from their listed mortgage rates in each of June, July and October. These were: Athena, Bank First, Homestar, and UBank.
- A total of 69 home lenders made reductions less than the full quarter of a percent, the average cut was 15bp and the smallest reduction was just 5bp.
- Amongst the major brands were: AMP (-15bp), Bank of Queensland (-10bp), Bankwest (13bp), Bendigo Bank (-15bp), Heritage Bank (-15bp), ING (-15bp), ME (-15bp), St.George Group (-15bp) and Suncorp (-15bp).
- The average total rate reduction since the beginning of June is 51 basis points.
Key Changes - Fixed Rates
- The most significant cuts in the fixed rate market we observed over October were from lenders including: ANZ (cut 2 and 3 year fixed rates 10-50bp), Auswide Bank (all terms 10-121bp), Bank Australia (all terms 10-50bp), Citi (all terms 25-50bp), Commonwealth Bank (2 and 3 year rates 10-29bp), HSBC (all terms 35-55bp), Macquarie (all terms 30-40bp), ME (most terms 20-59bp), NAB (all terms 20-41bp), St.George Group (most terms 5-46bp), UBank (all terms 25-30bp) and Westpac (most terms (5-46bp).
*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.
A few mutuals again pushed through purchase rate reductions in response to the Reserve Bank cash rate cut, however the vast majority of card issuers have left their products unchanged. Coles added a substantial introductory bonus point offer for its leading rewards earning card, while a handful of other issuers adjusted offers of 0% interest on purchases and balance transfer periods.
- Auswide Bank responded to the RBA rate cut with a prompt 25bp cut to the purchase and cash advance rates of the Low Rate Visa Credit Card which now both sit at 8.70%.Citi raised the Clear Platinum purchase rate by 2% to 14.99% and changed the offer to 0% interest on purchases and balance transfers for 9 months. The purchase rates for all other cards were increased by 50bp.
- Coles introduced a 120,000 bonus flybuy points offer to its Rewards Mastercard, and a 0% on purchases for 12 months offer on its Low Rate and No Annual Fee cards.
- Endeavour Mutual Bank decreased the Visa Credit Card purchase rate by 50bp to 10.49% and the cash advance rate by the same to 15.49% in coordination with newly merged Sydney Mutual Bank which raised its Low Rate Visa cash advance rate by 5%.
- Heritage Bank also followed the RBA rate cut with 25bp decreases to purchase and cash advance interest rates for the three retail cards; Gold Low Rate (a matching 11.30%), Classic and Platinum (17.49% purchase and 19.49% cash advance rates).
Virgin Money updated its card offerings with a lengthened 0% interest on balance transfers for 22 months (up from 18 months) with an increased annual fee of $129 ($64 in the first year) for the Velocity Flyer Card - Balance Transfer Offer.
Of the personal loan interest rate changes we observed in October, most were reductions. This was made up of a mixture of customer owned banks passing on a percentage of one or more cash rate cuts, and short term special offer promotional cuts.
- Personal loan lenders that passed on a portion of the preceding months cash rates cuts include: Bank First (20bp), Beyond Bank (20bp off Low Rate Car Loan),
- Heritage Bank (25bp), QBank (50bp), Qudos Bank (15bp) and RAA (50bp).
- Commonwealth Bank made significant cuts to fixed interest rates, with its Car Loan decreased by 1.50%, now 6.99% across all terms (8.05% comparison rate*) and its Personal Loan was cut by 2%, now 10.99% for a 5 year loan (11.88% comparison rate*).
- Gateway Bank reduced the Car Loan for vehicles under 5 years old by 1.95%, changing it to 5.99% (6.20% comparison rate*).
- MyState Bank cut its new car Secured Personal Loan fixed rate by 1%, lowering it to 5.99% (6.63% comparison rate*).
- Southern Cross Credit Union cut its Unsecured Personal Loan variable rate by 1% to 9.49% (9.85% 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. 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.
Not surprisingly, the majority of at-call deposit rates were reduced again in October, with the overall market average for ongoing rates dropping 11bp to 1.02%. The products that received the greatest share of these cuts were the ‘high interest’ conditional bonus rates, particularly those at the pointy end of the market. Depositors will need to go searching for decent return on their savings with only eight savings accounts now offering rates above 2% on a $10,000 balance.
- ANZ once again cut the introductory rate on its Online Saver account by 25bp, now 1.60% for 3 months. The ongoing bonus rate of its Progress Saver was also cut 25bp to 1.60%.
- Commonwealth Bank reduced its NetBank Saver introductory rate by 35bp, currently 1.65% for the first 5 months, it also cut the reverting base rate from 0.15% to 0.10%. It’s GoalSaver account ongoing rate was cut below the 1% mark to 0.90%, representing a 25bp reduction.
- NAB’s iSaver had its introductory rate cut 41bp to 1.70% for 4 months, while its Reward Saver ongoing bonus rate was reduced 25bp to 1.61%.
- Westpac cut the introductory rate on its eSaver product by 25bp, currently 1.66% for 5 months. The ongoing bonus rate of its Progress Saver was also cut 25bp to 1.65%, with the base rate when the saving conditions aren’t met, reducing 15bp to 0.45%.
- The leading ongoing bonus rates, for those that have made changes following the July cash rate reduction, include Bank of Queensland’s Fast Track Saver account at 2.15% (35bp cut), ING’s Savings Maximiser down 25bp to 1.95%. ME’s Online Savings Account now 2.20% (25bp cut), Up’s Saver Account 2.25% (25bp cut), and UBank’s USaver at 2.10% (31bp cut)
- At a balance of $10,000, the average interest rate in the Mozo database for online savings accounts is now 0.88%, the average ongoing bonus rate is 1.66%, and cash management account average is now at 0.21%.
Market average term deposit rates tumbled for the eighth straight month, down to 1.49% for a 1 year term, paid at maturity. This has come as no surprise with another cash rate cut from the RBA.
- With another reserve bank cash rate cut, we saw further term deposit rate reductions from the big 4. ANZ reduced term deposits across the board by 5 to 30bp, Commonwealth Bank cut all terms 15 to 35bp, NAB reduced the rates on its entire range 15 to 25bp, while Westpac cut all rates 10 to 15bp.
- Of the 69 providers that cut term deposit rates during October, the greatest sweeping reductions were observed from Arab Bank Australia (10-40bp), BankVic (20-35bp), Community First CU (35bp), Hunter United (35bp), ME (15-60bp), Newcastle Permanent (20-35bp), Regional Australia Bank (25-40bp), and Summerland CU (15-30bp).
- Two deposit taking institutions went against the grain and made improvements to their term deposit rates during the month. Bank of Sydney increased the majority of its online only special rates 25 to 45bp, with a 12 month term now priced at 1.75%. Endeavour Mutual Bank also increased its rates by 5 to 20bp, however this pricing is more to align its offerings its new sister bank Sydney Mutual Bank (formerly SCU).
* rate tables based on a deposit of $25,000
The content of this report is produced using Mozo's extensive database of banking products, which is updated every day.
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