Rising deposits & fixed rates point to impending mortgage pain

• Mozo’s analysis also shows 13 variable interest rate cuts last month, while Firstmac (40bp), Suncorp (4-10bp), Teachers Mutual Bank (20bp) and Virgin Money (5bp) increased variable interest rates for at least one borrower type last month
• 57 of the 90 lenders tracked by Mozo increased fixed interest rates in March, with the 3 year average up 28 basis points to 3.54% and the 5 year up 32 basis points to 4.08%
• Term deposit rates at pre-pandemic levels, with 5 year terms now at 3%
• Bank of Queensland targeting younger savers up to 35 years with a 2% bonus rate
• MoneyMe offering better credit card interest rates to customers with higher credit scores

With some analysts expecting the Reserve Bank to hike the cash rate as early as June this year, Mozo’s database reveals there were 139 term deposit increases and 57 lenders increased fixed loan rates last month as the market continues to price in higher interest rates. 

“When it comes to fixed home loan rates and term deposits, the only way is up as lenders and deposit takers eye a potential higher cash rate, which might point to impending mortgage pain for variable rate customers,” says Mozo spokesperson Tom Godfrey. 

Fixed and Variable Home Loans 

Mozo’s analysis shows fixed rates continue to trend up with no signs of slowing down with three of the big four banks making significant increases this month. Of the 90 lenders tracked in the Mozo database, 57 increased some or all fixed rates and 13 cut variable rates. 

Mozo also found Firstmac (40bp), Suncorp (4-10bp), Teachers Mutual Bank (20bp) and Virgin Money (5bp) increased variable interest rates for at least one borrower type last month and the number of fixed rate offers under two percent is rapidly dwindling.

“With three of the big four banks hiking their fixed rates again last month and although some lenders lowered their variable rates in a bid to attract new customers, the writing is on the wall that a rate rise is coming,” Godfrey says. 

Savings accounts and term deposits  

Mozo’s analysis shows 139 term deposit rate increases and 26 cuts last month, the average increase was 35 basis points across all terms. This saw term deposit rates quickly hit and exceeded 2% this month, with the highest rate now 3.10% for 5 year terms, up 1.15%. 

The last time Mozo’s database recorded a 2% term deposit rate was in June 2020, while 3% offers haven’t been recorded since June 2019, well before the pandemic.  

When it comes to savings accounts, Mozo found competition for young savers heating up with Bank of Queensland launching Future Saver for 14 to 35 year olds, with a bonus interest rate of 2.00% up to $50,000. 

Credit cards

Mozo’s database shows MoneyMe updated the rate structure on its Freestyle Virtual Mastercard, with interest rates now ranging from 14.99% to 19.99% depending on the customer’s credit score, previously 16.99%.

“As credit card providers start offering better interest rates to people with higher credit scores, it’s a timely reminder to take a proactive approach to your personal finances and ensure you pay your bills on time,” says Godfrey.

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