Savings rates, home loan rates, mortgage holidays: this week’s best banking news

  • Westpac’s market-leading savings rate for under 29s
  • Low mortgage rates, harsh lending conditions and first home buyers 
  • Home loan repayment holidays extended 
  • Business innovation inspires positivity for post COVID-19
  • What a risk-based personal loan could do for you 
  • 44% of Aussies intend to cut spending over the next 6 months 

All in this week’s best banking news recap: editor’s pick.

Westpac offers market-leading savings rate for young Aussies 

This week, major bank Westpac introduced a brand new savings account that has young Aussies’ heads turning. 

From July 8, the new Westpac Life account offers a market-leading 3.00% bonus interest rate for customers aged between 18 and 29 years old.

According to the Mozo database, the current average savings account rate sits at a low 0.70% so this is a massive step up but it doesn’t come without conditions to get this top rate: 

  • You need to be 18-29 years old 
  • You must make at least five transactions via a linked Westpac Choice account each month 
  • Your balance must grow by the end of the month
  • High interest only earned on balances up to $30,000 

Bear in mind though, for those you don’t meet the increasing balance criteria, but still make five transactions, they’ll receive a competitive 2.40%.

Read full article: Westpac offers young Aussie savers a new market-leading interest rate to find out more about this hot new product! 

What low home loan rates and harsher lending conditions mean for first home buyers

This week, AMP made a move to determine their home loan variable rates by a customer’s loan-to-value ratio (LVR) instead of loan amount tiers. 

And they aren’t the first Aussie lender to do it. 

Since the emergency RBA cut to 0.25% in March this year, 15 mortgage lenders in the Mozo database have made the change, including Newcastle Permanent, Bank Australia and online lender Athena. 

Essentially, it means that borrowers with higher LVRs, while they may qualify for a particular loan, will be excluded from receiving the lowest rates available. This makes it particularly hard for first home buyers to get the best rates on offer. 

“It’s not an easy time for first homebuyers in terms of getting a loan, but it is an easier time to buy a property, so that’s the tradeoff,” said Mozo property expert Steve Jovcevski..  

He explained that first home buyers seeking lower rates should be “saving as much of a deposit as they can. Because prices aren’t going to skyrocket any time soon, they’ve got a bit of time to do this.”

Read full article: Home loan rates at record low: Could tougher lending rules shut out first homebuyers? to find out what else Jovcevski said about this type of lending. 

Mortgage repayment holidays: struggling Aussie borrowers receive extensions from banks

On Wednesday, major Aussie banks announced they will be deferring paused loan repayments for an additional four months. 

Despite many retail and business customers resuming their loan repayment schedules full (if not, partially), other borrowers are still feeling the financial pinch of COVID-19. 

“This next phase of bank support will avoid a ‘cliff’ for customers in September and give them the breathing space they need to work with their bank and get back on their feet financially” said Australian Banking Association CEO Anna Bligh.

So far 800,000 Australian banking customers have relied on the loan deferral scheme, 60% of which are residential home loans. According to recent Mozo data, these repayment holidays extensions are set to help avert $75 billion in potential home loan defaults. 

Read full article: More support on the way as banks extend mortgage holidays for struggling borrowers

92% of small businesses have hope for the future through innovation

Released this week, the Amazon Launchpad Innovation Report revealed that 92% of Aussie small businesses are feeling resilient despite COVID-19. 

In fact, 28% have used the time as an opportunity to innovate within their business, such as find new revenue streams (27%), launch online eCommerce business (23%), create new products or even transform current ones (18%). 

Similarly, an additional 35% of small businesses claimed that lockdown enabled them to review and re-jig their current business plan, and 38% said it gave them the opportunity to inspire creativity. 

Read full article: Small businesses innovate to beat challenges of 2020 and check out some hurdles that stand in the way of businesses’ ability to change and adapt. 

The benefits of risk-based personal loans 

While it may be thought thatthat risk-based personal loans only benefit customers with good credit, it’s not entirely the case. 

Risk-based pricing or personalised interest rates, refer to the interest rate that a bank calculates according to a customer’s credit rating.  

According to Mozo banking expert, Peter Marshall, this type of lending has become more popular over the past 10 years. He explained that these loans don’t only benefit consumers with a good credit history but also offer an opportunity to borrow for those with a low credit rating. 

“There’s also a benefit to borrowers that might have a low credit rating, because a lot of lenders who offer a single rate may have tighter criteria about who they will give that rate to,” he said.  

“Borrowers with a low credit rating might find themselves locked out of some lenders based on that criteria.” 

Read full article: How a risk-based personal loan could benefit you to find out what David Norman, chief operations officer from online lender NOW FINANCE, says about how risk-based lending works. 

44% of Aussie consumers will cut spending for the rest of the year, says MyState Bank

According to MyState Bank, 44% of Aussies are intending to hold back on spending on non-essentials for the rest of 2020. 

In a recent survey, they found that consumers want to spend less on things like: 

  • Gym memberships: 44%
  • Public transport: 43% 
  • Home furnishing and decor: 38%
  • Takeaway food: 38% 
  • Clothing and footwear: 36% 

Alternatively, the research showed that over 25% of Aussies foresee themselves spending more on both groceries and household utilities over the next six months. 

“For many Australians, the introduction of social distancing measures has been an opportunity to save more than ever before on expenses from public transport to dining out at restaurants,” said Heather McGovern, MyState Bank general manager, customer experience.

“Being isolated has also compelled more Australians to consider new and more innovative and cost-efficient ways of doing things, like swapping out memberships at physical gyms for fitness apps. Our research indicates that Australians are likely to prolong their savvier spending habits even after social distancing measures have lifted.”

Read full article: MyState Bank: 44% of Aussies to reign in spending for the rest of 2020 for five ways to be financially thrifty this year. 

On the hunt for a brand new savings account? Take a look at some competitive options below. 

Compare Savings Accounts 2020 - rates updated daily

Search promoted savings accounts below or do a full Mozo database search. Advertiser disclosure.
  • placeholder
    Boost Saver with Go Account

    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    1.20% p.a. (for $0 to $250,000)
    0.10% p.a.(for $0 and over)
    Yes up to $250,000

    Deposit $2,000 each month and make 5 eligible payments from your Go Account. If you are between 18 and 25 deposit $1,000.

    Enjoy a savings account bundled with a spending account. New customers can earn up to 5000 bonus Virgin Money points on purchases (conditions apply). Benefit together with a joint account

    Go to site
    Details
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    Mozo Experts Choice 2021
    Bonus Saver Account

    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    1.20% p.a. (for $0 to $250,000)
    0.10% p.a.(for $0 and over)
    Yes up to $250,000

    Bonus rate when at least $20 is deposited each month and five Visa Debit transactions are made each month using linked Everyday or Glide transaction accounts.

    Winner of a Mozo Experts Choice Award 2021 in the Regular Saver category. No monthly account fees and no minimum balance requirements.

    Go to site
    Details
  • placeholder
    Grow Saver

    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    0.65% p.a. (for $0 and over)
    0.10% p.a.(for $0 and over)
    Yes up to $250,000

    Make at least 1 deposit and no more than 1 withdrawal, including internal transfers or external payments.

    Earn a maximum interest rate of 0.65% per year. Pay no monthly fees. Set up in-app savings goals. Benefit with joint account options.

    Go to site
    Details
  • placeholder
    Serious Saver

    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    0.30% p.a. (for $0 to $1,000,000)
    0.15% p.a.(for $0 and over)
    Yes up to $250,000

    Bonus rate for first 3 months, reverting to 0.15% rate after

    $0 monthly account fee. Link to any Australian bank account.

    Go to site
    Details
  • placeholder
    Hero Saver

    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    0.70% p.a. (for $0 to $250,001)
    0.01% p.a.(for $0 to $5,000,000)
    Yes up to $250,000

    Minimum deposit of $200 and no withdrawals in the month.

    Interest is calculated daily and paid monthly. Automatic payment feature. No minimum opening balance needed.

    Go to site
    Details
  • placeholder
    Fast Track Saver Account

    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    1.05% p.a. (for $1 to $250,000)
    0.05% p.a.(for $1 and over)
    Yes up to $250,000

    Ongoing bonus rate applied if in the previous month $1,000 or more is credited to the linked Day2Day Plus account and 5 eligible transactions are made by the linked account.

    Earn 1.05% p.a. Bonus Interest in the following month on your Fast Track Saver Account balance. Earn Bonus Interest on your savings, with no minimum balance required.

    Go to site
    Details

^See information about the Mozo Experts Choice Savings Accounts Awards

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