Mozo Banking Roundup September 2019
Tuesday 01 October 2019
The home loan rate war continues, term deposits and savings rates are on the way down - and now there’s another RBA rate cut on the way. Our Mozo Banking Roundup for September will keep you up to date on all the latest changes.
Mozo’s database covers more than 1800 products from over 200 providers, and there have been plenty of changes to talk about this month. We’re still feeling the fallout of the last two rate cuts, and potential shifts in anticipation of a third, with lenders adjusting fixed rate loans and savings rates.
And with another RBA rate cut expected for the first day of October, there’s likely to be a lot of changes in the coming days. So while this report covers the rates currently, keep in mind that they’re liable to change relatively quickly.
- The RBA sitting on its hands for the last two months hasn’t resulted in a ceasefire in the Home Loan rate war. Some lenders trimmed their already competitive variable rates further, and plenty of fixed rates were cut, with a new low of 2.74% now available for 2 or 3 year terms.
Consumer loans company Latitude pushed its low rate Credit Card toward the pointy end of the market with a significant rate cut.
- Dedicated car loans are where the majority of competition has been occurring in the Personal Loan category this month, with rate leaders cutting rates even further.
- Two of the ‘big 4’ banks were among those that took a knife to At Call Deposit rates, even with no change in the official cash rate for the last two months. Neo-bank Xinja received its banking licence, and promptly announced details of a transaction account with a savings account expected soon.
- The pace of cuts to Term Deposit rates has slowed only slightly from the last few months. A new bank launched its term deposit product and now offers the best rates tracked in our database.
The RBA is widely expected to announce another reduction to the official cash rate at its October meeting later today after two months with no change. This pause has been reflected in a far lower volume of cuts to home loan rates in September than we’ve seen in the last few months, although strong competition has meant that there have been some significant shifts occurring. Notably one of the big four improved rates on its basic product, and a number of well known brands sharpened key offerings.
For fixed rates the volume of change was down significantly on recent months, and you’d have to go back to April this year to find a month with fewer fixed rate reductions. Two of the major banks improved the market position of their fixed rates, and the best 2 and 3 year rates for owner occupiers are now at just 2.74%.
Key Changes - Variable Rates
- Heritage Bank cut 10 to 15 basis points across both its Discount Variable and Home Advantage Package home lending products. The most competitive rate now on offer is 3.22% variable rate (3.24% comparison rate*).
- HSBC now offer a competitive 3.17% (3.19% comp rate*) headline rate courtesy of a 5 to 10 basis point cuts to selected rates on its Discount Home Value Loan offer and Premier home loan package.
- ME made reductions of between 5 and 102 basis points on its home loans over the course of the month. The majority of these cuts were against investment home loans, but its lowest rate on offer was reduced to 3.29% (3.73% comp rate*) for owner occupiers packaged, representing a 10bp cut. The lowest rate for investment packaged lending is now 3.68% (4.11% comp rate*), a 9bp cut.
- Suncorp cut 11 basis points from both the Owner Occupier and Investor options on its Back to Basic Special Offer. Now priced at 3.18% (3.19% comparison rate*) and 3.48% (3.49% comparison rate*) respectively.
- Westpac reduced the interest rates on its lowest rates on offer during September. 15bp was cut from owner occupier rates on its Flexi First Option Home Loan (now 3.43% above 70% LVR (3.44% comparison rate*), 3.38% below (3.39% comparison rate*)) and cut 34bp for investors (now 3.74% above 70% LVR (3.75% comparison rate*), 3.69% below (3.70% comparison rate*)).
Key Changes - Fixed Rates
- Bendigo Bank cut 2 and 3 year fixed rates between 10 and 30bp. It’s most competitive rate being a 2 year packaged, owner occupier, principal & interest rate at 3.09% (4.16% comparison rate).
- Commonwealth Bank cut up to 90 basis points on its fixed rates over the month. This is mostly catchup however, bringing them in-line with the other major banks and at the top of the bell curve for the fixed rate market in general. For an owner occupiers looking for a fixed 5 year rate, its offer is now 3.49% (4.46% comp rate*) packaged.
- Heritage Bank made reductions to its entire range of fixed home lending between 10 and 30 basis points. A packaged 3 year owner occupier now comes in below the 3% mark at 2.99% (3.67% comparison rate*).
- ME cut between 10 and 30 basis points from both packaged and basic investment fixed rates. 3 year rates start at 3.48% (4.06% comp rate*) for investors looking to package their loan.
- Westpac made similar changes to CommBank, cutting between 70 and 116bp on its 1, 4 and 5 year fixed rates. As a part of its Premier Advantage Package for owner occupiers, its 5 year rate is now 3.49% (4.01% p.a. comp rate*).
Most credit card changes this month were around adjustments to sign-up offers. The big change to note though was the decision by Latitude to make a meaningful reduction to the rate on its Low Rate Mastercard, taking it below the 10% mark, and making it one of the lowest rates available.
While Latitude has a wide variety of cards in its suite, this is the first time we can recall those cards being truly competitive on a price basis. Latitude has been making a number of changes of late, improving its product range under the guidance of Chief Executive Ahmed Fahour, ahead of its IPO later this month.
- ANZ introduced a 75,000 bonus reward points special offer with a spend of $1,500 required in the first three months.
- Bendigo Bank introduced a 6 month interest free period on balance transfers on the Low Rate First Mastercard, Low Rate Platinum Mastercard, and Platinum Rewards Mastercard. The Platinum Rewards Mastercard also now includes an offer of 50,000 bonus rewards points with a $1,500 spend in the first 3 months.
- Citi is now waiving the $395 annual fee for the Signature Qantas Credit Card for the first year while the $49 rewards program fee still applies.
- Coles launched a special offer on the No Annual Fee Mastercard of 20,000 bonus Flybuy Points with a $500 spend requirement within 60 days, and 50,000 bonus points on the Rewards Mastercard with a $1,500 required spend within 3 months.
- David Jones bonus point offers on American Express credit cards were halved for Standard cards and cut by a third for the Platinum options all still requiring a $750 spend within 3 months. Now 15,000 Membership Rewards points or 7,500 Qantas points are available on the David Jones American Express Card with 30,000 Membership Rewards points or 15,000 Qantas points on the David Jones American Express Platinum Card.
- Latitude dropped rates on the Low Rate Mastercard by 2.10% with the purchase rate now 9.89% (previously 11.99%) and the cash advance rate now 18.89% (previously 20.99%). The GO Mastercard cash advance rate was decreased by 3.59% from 29.49% to 25.90%.
- IMB Bank, Macquarie Credit Union, and RACQ Bank all made increases to low rate credit card annual fees with IMB and RACQ introducing introductory discounts for the first year.
The lowest car loan rate in our database was cut by another 10bp, now 70bp lower than the next best loan available for a new car. Highlighting just how much lower this rate is than its competitors, the difference would have been 126bp if not for MOVE Bank dropping its rates this month too (see below).
- Loans.com.au decreased rates on the full range of Secured Car Loans by 10bp, the lowest option, the Green Car Loan, now with a fixed 3-5 year interest rate of 4.19% (4.73% comp rate*) currently the lowest in the Mozo database.
- Macquarie Credit Union changed the structure of Secured Car Loans, with a new division of vehicle age and lowering fixed interest rates by at least 3.00% overall. Interest rates now start from 5.99% (6.65% comp rate*) for a new car loan.
- MOVE Bank decreased the New Car Loan (up to 3 years old) by 50bp from 5.39% to 4.89% (5.16% comp rate*) for all 1-7 year fixed term options.
- Southern Cross Credit Union increased the Unsecured Variable Personal Loan by 2.00% from 10.49% to 12.49% (12.86% comp 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.
Even without any change to the official cash rate, two of the ‘big 4’ banks cut rates on their at call savings accounts. And while there were fewer cuts to deposit rates compared with previous months since the RBA started the current round of cuts, we still saw reductions applied to 15 ongoing bonus rates, 9 introductory rates, and 11 base rates.
- ANZ cut the introductory rate on its Saver Account by 10bp and the reverting base rate 5bp, now 1.85% for 3 months, then 0.10%. It also cut 10bp from the ongoing bonus rate of the Progress Saver, now 1.85% when at least $10 is deposits each month and no withdrawals are made.
- CUA reduced the interest rate on its eSaver Flexi by 20bp during September. Now at 1.50%, it is still amongst the leading at-call savings account on offer where there are no hoops to jump through to receive the rate.
- The popular ING Saving Maximiser ongoing bonus rate was cut a further 10bp, after two successive 25bp basis cuts following the RBA cash rate reductions. At 2.20% ongoing when account requirements are met, the product is still within to top 10 saving rates in the Mozo database
- Westpac and its subsidiaries all cut savings rates during September. The Westpac eSaver introductory rate was cut 10bp to 1.91% for the first 5 months, 0.15% thereafter. The ongoing bonus rate of the Life account was cut 5bp to 1.90%.
- St.George, Bank of Melbourne, and BankSA cut the introductory rate of their Maxi Saver 10bp to 2.05% for 3 months. Finally RAMS reduced the ongoing bonus rate on its Saver Account to 2.25% (10bp cut).
- Neobank Xinja received its full APRA banking licence during the month, releasing a transaction account to selected users that had signed up early. The bank account comes with no standard fees and no international transaction charges. Xinja plans to launch its “Stash” savings account soon, with lending products penciled in for an early 2020 release.
While the pace of rate cuts for home loans and at call deposits have slowed somewhat, the same cannot be said about term deposits where the number of cuts in September is only slightly less than the volume observed in the three months before. Judo Bank launched its term deposit product during the month, now offering the best rate we can find for any of the terms it has available.
- One again we observed reductions from the Big 4 during the month. ANZ cut term deposits across the board by 5 to 25bp, Commonwealth Bank reduced shorter terms 5 to 15bp, NAB their entire range 10 to 35bp, while Westpac cut all rates 10 to 20bp.
- Judo Bank launched its term deposit in September, leading the market in every term it offers. It’s 12 month rate is priced at 2.40%, 40bp clear of its nearest competitor at the time of publication.
- Of the 63 providers that cut at least one term this month, the greatest sweeping term deposit cuts were seen from Bank of Sydney (25-45bp), Bank of us (10-45bp), firstmac (25-70bp), G&C Mutual Bank (10-25bp), IMB Bank (25-35bp), MyState Bank (5-45bp), People’s Choice CU (5-40bp), RACQ Bank (25-35bp), Southern Cross CU (25-40bp), St.George, BankSA, and Bank of Melbourne (10-20bp), Teachers Mutual Bank (15bp) and UBank (15-25bp).
*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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