17
July 2019 Published 01/08/2019
Only 8 Home Loan providers have passed on the full amount of the RBA’s two latest cash rate cuts to their variable rate customers as margins feel the squeeze. Fixed rates are tumbling with the top 1 and 5 year rates dropping by more than 50bp in the last two months.
A variety of Credit Card issuers dropped rates this month, and a subsidiary of one of the big 4 banks cut the rate on its low rate product below the 10% mark.
A range of mutuals have reduced rates on Personal Loans, but non-mutual banks have been very quiet on this front.
Bonus rates for At Call Deposits are down as expected, but we’re now well into the territory where providers are already offering base rates less than 0.25%, begging the question of what happens if the RBA cuts the cash rate again?
Term Deposits are converging at a point just below 2.00%, regardless of term, following yet another month of heavy rate cutting.
1
Home Loans
The RBA’s official cash rate was cut by another 25bp in July and as rates head lower, interest margins are inevitably being squeezed as the gap between deposit and loan rates is compressed. With only a handful of lenders yet to adjust rates, we’ve seen only 8 pass on the full 50bp total cash rate reduction over the past two months.
Fixed rates are being driven down rapidly. The number of fixed rate options being cut has been rising for the last few months, but in July the volume of those changes eclipsed previous months, almost double the May and June changes. And in a neat bit of accidental symmetry both the top 1 and 5 year fixed rates are down 60bp from where they were two months ago, perhaps signalling an expectation that there are more rate cuts coming.
Key Changes - Variable Rates
Once again, the first to announce rate changes following the RBA’s June cash rate decision were the Big 4. ANZ offered the full 25 basis point cut (cumulative 43bp) across all variable rate, Commonwealth Bank and NAB both reduced by 19bp (cumulative 44bp), while Westpac again cut 20bp (cumulative 40bp). Additionally, Westpac removed loan amount based interest rate tiers for its Premier Advantage Package, it now offers a flat 3.69% (4.09% comp rate*) for all loan amounts over $150k for an owner occupied, principal & interest borrower.
Only 13 home lenders passed on the full rate cut this time round, of these, just 8 have cut 25bp from their mortgage rates in both June and July. These were: Athena, Bank
First, Greater Bank, Homestar, Newcastle Permanent, RACQ Bank, The
Capricornian, and UBank
2
A total of 64 home lenders made reductions less than the full quarter of a percent, the average cut was 18bp and the smallest reduction was just 5bp. Amongst the well-known brands were: AMP (-20bp), Bank of Queensland (-15bp), Bankwest (19bp), Bendigo Bank (-20bp), Heritage Bank (-15bp), ING (-20bp), ME (-15bp), St.George Group (-20bp) and Suncorp (-19bp).
Additionally, we are tracking 9 banks, credit unions and other lenders who have yet to apply or announce across the board rate reductions following the Reserve Bank decision.
Key Changes - Fixed Rates
AMP cut its packaged fixed rates up to 53bp for is 2 year rate (now 3.10%, 4.39% comp rate*) and 34bp for its 3 year rate (now 3.29%, 4.33% comp rate*).
ANZ reduced all fixed rates between 10 and 96bp during July. A 3 year packaged fixed rate is now priced at 3.28% (4.53% comp rate*).
Greater Bank once again made large reductions to its fixed rates, cutting between 10 and 60bp on most term options, many of which now lead the market. Its 4 and 5 year rates are now both 3.39% (4.11% comp rate*), packaged.
Commonwealth Bank made cuts of 20 to 61bp on its 2, 3 and 5 year fixed rates. For owner occupiers paying principal & interest, a packaged 3 year fixed is now available at 3.28% (4.54% comp rate*).
NAB cut 30 to 55bp from all fixed rate terms. It’s packaged 3 year fixed is priced at 3.29% (4.45% comp rate*).
3
Market Snapshot Major banks Basic Variable, Owner
Occupier Variable Rate Comparison Rate*
ANZ Simplicity PLUS 3.38% 3.42%
Commbank Extra Home Loan 3.35% 3.36%
NAB Base Variable Rate Home Loan 3.35% 3.39%
Westpac Flexi First Option Home Loan 3.58% 3.59%
Major banks Best package variable rates, Owner Occupier Variable Rate Comparison Rate*
ANZ Over $500,000 (<80% LVR) 4.03% 4.44%
Commbank Over $750,000 4.23% 4.84%
NAB Over $750,000 4.02% 4.42%
Westpac Over $750,000 3.69% 4.09%
Major banks Best package fixed rates, Owner Occupier
1 year
(comparison rate*)
2 years
(comparison rate*)
3 years
(comparison rate*)
4 years
(comparison rate*)
5 years
(comparison rate*)
ANZ 3.28% (4.72% ) 3.18% (4.60%) 3.28% (4.53%) 3.53% (4.52%) 3.53% (4.46%)
Commbank 3.89% (4.79%) 3.18% (4.61%) 3.28% (4.54%) 4.09% (4.72%) 3.49% (4.46%)
NAB 3.49% (4.64%) 3.19% (4.51%) 3.29% (4.45%) 3.59% (4.47%) 3.59% (4.42%)
Westpac 4.09% (4.13%) 3.18% (4.00%) 3.28% (3.99%) 4.09% (4.22%) 4.09% (4.25%)
4
Rate leader, best variable rate for Owners, 80% LVR
Variable rate Comparison Rate*
Reduce Home Loans Rate Slasher 2.89% 2.89%
Rate leader, best fixed rate for Owners at each term Fixed rate Comparison Rate*
Greater Bank 1 year 2.79% 3.95%
Bank Australia 2 years 2.94% 3.66%
Mortgage House 3 years 2.96% 3.31%
Greater Bank
Macquarie 4 years 3.39% 3.84%
3.29%
UBank 5 years 3.19% 3.59%
*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.
5
Home Loan Rate Premiums With the APRA lending curbs now a distant memory, the premiums that were applied as part of the response to those restrictions are slowly unwinding. Mozo put together this chart which shows the shift in average variable rates for different borrower types and repayment options over the last 4 years. Interest only rates for owner occupiers remain elevated, while investor rates are moving closer to the prime principal and interest rates for owner occupiers.
7
Credit Cards
A range of credit card issuers have reacted to the RBA rate cuts, reducing both purchase and cash advance rates, plus we saw the usual shuffling and adjusting of introductory offers. Bankwest has a large range of card options, but now has its first offering with a rate slipping in below the 10% mark.
Key changes
American Express reduced the offer of bonus Velocity Points from 100,000 to 50,000 for the Velocity Platinum Card.
Auswide Bank passed on both June and July rate cuts on the Low Rate Visa credit card with the purchase and cash advance rates now at 8.95%.
Bank First reduced purchase and cash advance rates for both Classic and Platinum Visa Credit cards by 15bp, now at 12.79% and 9.84% respectively.
Bankwest made a 3.09% cut to purchase rates on Breeze and Breeze Platinum Mastercards, now both at 9.90%, while reducing the term of 0% interest on balance transfers from 26 months to 6 months.
Bendigo Bank changed the Low Rate Mastercard offer from a 0% purchase rate for 12 months to 0% interest on balance transfers for 18 months.
Citi changed the bonus points offer on the Platinum credit card from 100,000 points to 80,000 points with an additional 40,000 after payment of the second year annual fee.
Coles reduced the offer on all credit cards of 0% interest on balance transfers from a 15 or 18 month term to a 6 month term.
8
Heritage Bank responded to the July rate cut by reducing personal credit card purchase and cash advance rates by 25bp with the Classic and Platinum cards at 17.74% and the Gold Low rate card at 11.55%.
HSBC made changes to the Low Rate Credit Card in reducing the purchase rate from 13.25% to 12.99%, increasing the cash advance rate from 21.99% to 25.99% and increasing the annual fee by $20.
Jetstar made significant reductions to the cash advance rates on its Mastercard range. For the Platinum card the reduction was 2%, now 19.99%, and for the standard Mastercard the cash advance rate was reduced by 7% to 19.99%.
Macquarie reduced cash advance rates of the Black Card and Platinum Mastercard credit cards by 1.25%, now both at 20.70%. The cash advance rate on the RateSaver Card was cut by 6%, now at 15.95%.
Virgin Money changed the bonus point conditions for the Virgin Australia Velocity Flyer Cards from a set number of points each month, to 3 points per dollar spent for the first 3 months of use, to a maximum of 10,000 points per month.
Westpac extended the bonus point offers on Altitude Black credit cards.
9
Market Snapshot
Majors Summary of card offers
ANZ ➢ 0% for 18 months BT (+2% fee) on First & Platinum. ➢ 0% for 15 months BT on Low Rate. ➢ 25,000 to 100,000 bonus points on Frequent Flyer and Rewards.
Commbank ➢ 5.99% for 5 months BT on all cards. ➢ $0 first year annual fee on Low Fee, Low Fee Gold cards. ➢ $200 cashback on Low Rate and Low Rate Gold cards. ➢ 30,000 to 120,000 bonus points on Awards cards.
NAB ➢ 0% for 6 months BT (+2% fee) on all cards. ➢ 0% for 6 months intro purchase rate on Low Rate, 15 months on Low Rate
Platinum. ➢ Between 30,000 and 90,000 bonus points on Qantas and Rewards cards.
Westpac ➢ 0% for 9 months purchase rate on Low Fee. ➢ 0% for 18 months BT on Low Rate. ➢ $0 first year annual fee on Low Rate. ➢ $0 first year annual fee on Low Fee and Low Fee Platinum in first year or if
spend $5,000 ($10,000 for Platinum). ➢ $150 reduction in first year annual fee for Altitude Platinum with American
Express. ➢ 60,000 bonus points on Altitude Platinum, 80,000 on Altitude Black. ➢ 75,000 bonus points on Altitude Platinum with American Express, 120,000
on Altitude Black with American Express.
Top offers
0% BT Citi Platinum 26 months (1.5% fee)
0% purchase NAB Low Rate Platinum 15 months
Lowest purchase G&C Mutual Bank Low Rate Visa 7.49%
Bonus points Bank of Melbourne BankSA St.George Citi Qantas Money
Amplify Signature Amplify Signature Amplify Signature Prestige Qantas Premier Titanium
200,000 Amplify 150,000 Citi 150,000 Qantas
10
Personal Loans Very few lenders have passed on the cash rate reductions to personal loan customers, and rates from the big 4 banks have been static for at least 5 months now. Most of the changes we did see this month were from mutuals.
Key Changes bcu passed on the RBA rate cut, taking 25bp off its range of personal loan offerings. It’s Car Loan is now priced at 5.65% (6.57% comp rate*), secured Freedom Loan at 7.58% (8.49% comp rate*) and unsecured Freedom Loan at 9.30% (11.36% comp rate*).
Greater Bank cut 26bp from its fixed New Car Loan (now 5.49%, 5.87% comp rate*), and 40bp from its Secured Personal Loan (currently 6.49%, 6.88% comp rate*).
Heritage Bank also applied the full RBA cash rate adjustment, taking 25bp from the variable rate on both its Low Rate Secured Personal Loan (now 4.94%, 7.41% comp rate*), and its Standard Personal Loan (now 12.74%).
NRMA reduced the rate on its fixed Used Car Loan by 99bp, to 6.25%.
Qudos Bank shaved 15bp from its variable Car Loan and Unsecured Personal Loan (now 6.69% and 11.24%, respectively). Additionally they reduced the fixed rates on its Qantas Points Car Loan by 60bp, now 7.99%. This loan offers 1,000 Qantas Points for every $1,000 on your average loan balance per annum.
RACV cut 24bp from its fixed Personal Loan, now 6.75%
11
Market Snapshot
Major banks Secured Comparison Rate* Unsecured Comparison Rate*
ANZ n/a 12.45% 13.32%
Commbank 8.49% 9.54% 12.99% 13.86%
NAB n/a 12.69% 13.56%
Westpac 8.49% 9.67% 12.99% 14.14%
Rate leaders Rate Comparison Rate*
loans.com.au Clean Green Car Loan 4.29% 4.83% Secured
G&C Mutual Bank
Symple Loans
Fair Rate Personal Loan Personal Loan 5.99% 6.20%
7.55% Unsecured
*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.
12
At-Call Deposits The top introductory and ongoing at call deposit rates are now at 2.75%, whether for a short term introductory rate or ongoing bonus rate, although the providers offering those rates haven’t yet announced changes since the last cash rate reduction. Some providers have opted to hold off passing on the full impact of the latest cash rate reduction, but many base rates have already dropped below 0.25%, so it will be interesting to see what happens to those rates if there’s yet another cash rate cut.
Key Changes ANZ cut 15 basis points from both the introductory rate and base rate on its Online Saver account (now 1.95% and 0.15%, respectively). The ongoing bonus rate on its Progress Saver was cut 25bp to 1.95%, with the 0.01% base rate remaining unchanged.
Commonwealth Bank also cut 15bp from both the intro (now 2.05%) and base (now 0.15%) on its NetBank Saver account. For its GoalSaver account, the ongoing bonus rate was cut 25bp to 1.15%.
NAB reduced the introductory and base rates of its iSaver account by 19bp (now 2.11% and 0.11% respectively). It’s Reward Saver ongoing bonus rate was also reduced 19bp (now 1.86%).
Westpac’s cut 20bp from the introductory rate (now 2.11%) and 15bp from its base rates (now 0.15%). The ongoing bonus rate on it’s Life account remains unchanged at 2.10%, however the reverting rate when the required deposits are not made was cut 20bp to 0.60%.
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
13
2.50% (previously 2.75%), MyState Bank’s Bonus Saver at 2.50% (was 2.60%), UBank’s USaver at 2.41% (19bp cut) and ME’s Online Savings Account at 2.35% (was 2.60%).
At a balance of $10,000, the average interest rate in the Mozo database for online savings accounts is now 1.04%, the average ongoing bonus rate is 1.90%, and cash management accounts is now 0.34%.
Market Snapshot Major banks Ongoing bonus rate Introductory rate
ANZ 2.20% Progress Saver 2.10% for 3 months Online Saver
Commbank 1.40% GoalSaver 2.20% for 5 months NetBank Saver
NAB 2.05% Reward Saver 2.30% for 4 months iSaver
Westpac 2.10% Life 2.31% for 5 months eSaver
Rate leaders
Endeavour
Mutual Bank
2.75% Lifestyle Account Ongoing bonus
AMP
Rabobank
2.75% for 4 months Saver High Interest Savings
Introductory
14
Term Deposits The number of cuts made to term deposit rates in July was enormous, only just beaten by the number of cuts we saw in June. Rates for term deposits have been converging at a point just below 2%, regardless of term. The average rates for key terms (3, 6, 9 and 12 months, 3 and 5 years) cover a narrow band from 1.79% to 1.91%, just 12bp.
The best rate in Mozo’s database at the time of writing is 2.33%, available for either 3 or 6 months - the next best is 2.30% for a 2 year term. The premium that used to be available for locking money away for an extended period has vanished. The top rates for 1, 3 and 5 years are all 2.20%.
Key Changes Further reductions for the big 4, with ANZ cutting term deposits across the board by 5 to 55bp, Commonwealth Bank reduced many terms 10 to 60bp, NAB cut 5 to 15bp on all terms, while Westpac cut selected rates 5 to 20bp, mostly on terms 1 to 5 years.
The largest across the board term deposit cuts were seen from Bank First (20-40bp), Bank of Queensland (10-40bp), Bank of us (15-80bp), Community First CU (35-65bp), Credit Union SA (10-50bp), HSBC (10-35bp), MyState Bank (5-55bp), People’s Choice CU (20-45bp), Police CU (25-65bp), Qudos Bank (35-40bp), Rural
Bank (15-40bp) and Suncorp (10-60bp).
15
Market Snapshot
Major banks Up to 1 year 1 year 2 years
ANZ 2.00% for 5 months 1.85% 1.75%
Commbank 1.90% for 7 months 1.65% 1.60%
NAB 2.00% for 4 months 1.75% 1.65%
Westpac 1.95% for 3, 4 or 6 months 1.75% 1.70%
Rate leaders
Less than 1 year Bank of Sydney (3 or 6 months) 2.33%
1 year firstmac Goldfields Money
2.20%
2 years firstmac Goldfields Money
2.30%
3 years G&C Mutual Bank 2.20%
4 years G&C Mutual Bank 2.20%
5 years G&C Mutual Bank Greater Bank
2.20%
* rate tables based on a deposit of $25,000
16
Mozo Banking Roundup
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 [email protected]
Important Information
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.
Under Mozo's Australian Credit and Financial Service Licence it is permitted to provide factual or general information that is sourced from external providers and not from Mozo itself. The information published in this email is of a general nature only.
The information contained in this email is governed by Mozo's standard Terms of Use. To the extent permitted by law, you indemnify and agree to keep Mozo indemnified against any loss or claim arising out of your use of any information contained in this email. Where Mozo collects information such as rates, pricing and product information we make every effort to ensure that all information displayed is accurate. Mozo does not warrant that the information contained in this report will be faultless or that all of the information displayed will be completely accurate and we accept no liability whatsoever for any errors or omissions.
Copyright © 2019 Mozo Pty Ltd. All Rights Reserved. ABN: 68 128 199 208. AFSL & ACL 328141 Level 10, 89 York St, Sydney NSW 2000
17
