Mozo Money Moves: Big Four Banks slash fixed rates as Judo hikes term deposits to steal top spot

Welcome back to Mozo Money Moves, your weekly finance fix where we dive into the latest changes in personal finance products. This week saw a number of fixed rate changes from the Big Four, including changes to personal loan fixed rates and home loan fixed rates, as well as a continuation of the  tumbling term deposit rates we have been tracking on the Mozo database, apart from one bank that decided to hike to steal top spot.

As rates continue to shift downward ahead of the Reserve Bank of Australia’s next cash rate decision, it looks like there may be light at the end of the tunnel for borrowers struggling with the pain that 13 rate hikes since May 2022 have inflicted. 

ANZ & NAB slash fixed rates

This week, two of the Big Four banks slashed fixed rate home loans, following on from the slew of cuts Mozo has been monitoring over the past few weeks -  over 200 in September when looking at owner occupier loans with LVRs of 80% or less paying principal and interest.

The cuts started with NAB making moves on Wednesday, implementing reductions across all 1- to 5- year terms for their Tailored Home Loan, after cutting its 3 year fixed rates by 60 bps back in July, to remain competitive and solidify its position among the Big Four.

NAB Owner Occupier Fixed Rate Home Loans (80%LVR or less)

Until now, ANZ had been the only major bank not to adjust fixed rates since NAB broke the stalemate in July, but today’s cuts ranging between 30-60 bps for owner-occupiers and 40-70 bps for investors, have shifted some of ANZ’s fixed rates for owner occupiers with 80% LVRs or less  below 6%p.a

ANZ Owner Occupier Fixed Rate Home Loans (80%LVR or less)

Effective from today, these cuts align with broader market trends amidst ongoing economic uncertainty and speculation about the RBA’s next move.

Comparing the Big Four bank’s 3- year fixed rates on offer to new borrowers as of today, we can see that all the major banks are now offering rates starting with 5.

However, Commbank and Westpac are only offering rates below 6%p.a.  for those who opt for home loan packages, which as you can see from the table below means they come with much higher comparison rates.

“The latest rate cuts from ANZ and NAB are a clear move to stay competitive and attract borrowers into locking in to a guaranteed rate for the next few years, as an expected rate cut looms,” says Wastell.

“With all the Big Four banks offering 3-year fixed rates starting in the 5s, there’s more on the table for borrowers, but you need to make sure you look beyond the advertised rates. Lenders may advertise low interest rates, but if the fees are high, the comparison rate could tell a different story”

“ Always check the comparison rate to get a realistic idea of what you’ll actually pay over the life of the loan, as the comparison rate can provide more insight into the true cost of the loan, by factoring in fees and charges.”

Fixed Rate Home Loan Insights:

• ANZ has finally cut interest rates on its fixed rate home loans, with the bank now offering loans for under 6% p.a.
• NAB has cut the interest rates  (again) on its fixed-rate home loan, so as we draw closer to the first Reserve Bank of Australia (RBA) cash rate cut; how do the new rates stack up?
• For borrowers looking to lock-in a low home loan rate, Macquarie has just shaken up the game, cutting fixed interest rates across the board and positioning them as a rate-leader.

87 cuts to fixed rates in October

As 2024 begins to wrap up, all four major banks—ANZ, NAB, Westpac, and CBA—have now significantly reduced their fixed-rate home loan offerings, but this trend is not limited to Australia's biggest banks. 

“The slashing of fixed rates suggests that lenders are preparing for rate cuts as we move into 2025, and this suggests that owner occupiers and investors may get a little more breathing room in the new year,” says Wastell.

According to the Mozo database, in October alone 87 cuts have been made to owner occupier fixed rate home loans with LVRs of 80% or less. 

“The most notable reductions have been seen in 2- and 3-year fixed terms, with cuts of up to 60 bps, aiming to attract owner-occupiers seeking mid-term certainty without locking in for too long,” says Wastell.”

“Banks appear to be hedging their bets by offering lower fixed rates for two and three year terms, anticipating that variable rates may drop below current levels during this period.’

With Australia’s latest monthly inflation CPI sitting at 2.7%, we’re finally seeing promising signs that inflation is easing and moving within the RBA’s target range. This downward trend is good news for borrowers who have been hit hard by the rate hikes of the past two years. 

“Commbank is the only major still forecasting an RBA rate cut by December, but the likelihood of another hike is shrinking. With the latest monthly inflation figure starting with two, we’re heading in the right direction, even though risks remain due to supply chain pressures.”

The fixed rate cuts by the major banks do suggest we have reached the peak of the tightening cycle, but until inflation is consistently under control, borrowers will need to remain cautious and stay informed. 

“We may not see a December rate cut, but the latest moves by ANZ, NAB, Westpac, and CBA do offer borrowers some hope. While the path has been rocky, the recent rate cuts are a beacon of hope—it looks like there's light at the end of the tunnel for borrowers.”

Commbank cuts personal loan fixed rates

After a quieter September in the Personal Loans space, which our research team covered in Mozo’s Banking Roundup, CommBank has made some changes to its personal loan offerings. It has  removed the $250 application waiver offer on Unsecured Personal Loans, and made 50 bps cuts across various fixed rate personal loans products, including it’s 3 year fixed which is now 7.00%p.a. 

As the only Big Four bank still forecasting a potential RBA rate cut in December, Commbank’s recent adjustments to term deposits and fixed rates seem to reinforce their confidence that a cut is on the horizon before the year ends. 

“This move could be aimed at enhancing their competitive edge in the personal loan sector, particularly after recent personal loan providers, like Coles, have stopped accepting new loan applications,” says Wastell.

“Alternatively, it might serve as a tactic to attract customers seeking comparably lower interest rates now, which could end up being more advantageous than variable rates once cash rate cuts materialise.”

Judo bucks the trend, hiking rates to lead for two headline terms 

When it comes to term deposits, we’re also seeing a marked shift in the landscape as expectations of an RBA rate cut loom closer.

“Like fixed rate home loans - term deposits are often a marker of where banks think the cash rate will go, as they need to hedge their bets in terms of risk and reward, as well as tempting depositors to stash their money with them,” explains Wastell.

After tracking 218 term deposit cuts in September, the pace has only accelerated. The Mozo database already shows 86 cuts since the beginning of October. ANZ and NAB are among those making adjustments—NAB has now cut rates twice since August, while ANZ reduced its term deposit rates on Tuesday, leaving its 8-month rate as the standout at 4.75% p.a.

A closer look reveals that the brunt of these cuts is concentrated on shorter-term offerings, particularly the headline 6, 12, and 24-month rates. 

75% of the providers that cut term deposit rates this month targeted their 12-month products, while 69% lowered their 6-month rates, and 63% made adjustments to their 2-year options.

To put things into perspective, just over two months ago, on 31 July 2024, the leading term deposit rates were higher across the board—0.20%p.a. more for 6-month terms, 0.25%p.a. higher for 12 months, and 0.30%p.a. more for 2-year terms.

However, there is one bank bucking the cutting trend to make sure they stay in the lead. On Thursday, Judo bank increased its 6 month term deposit rate by 0.05% to jump ahead of Gateway and land in the top spot offering depositors 5.15%p.a. Judo also increased its 2- year term deposit rate by 0.20% to knock Qudos Bank out of the top spot and offer savers a 4.75%p.a. return.

As of today, the leading rates on offer for $25k balances on the Mozo database are:

• 6 months: 5.15% p.a. from Judo Bank
• 12 months: 5.05% p.a. from Family First Bank
• 2 years: 4.75% p.a. from Judo Bank

“If you’re thinking about locking in a term deposit to secure a guaranteed rate, now might be the time to make that decision, because shopping around becomes even more vital in what is becoming a rapidly shifting rate environment.”

“It’s clear that while most are cutting, there are still some banks making adjustments to steal top spot, but it’s unlikely we’ll see those super high term deposit rates we saw a few months ago come back anytime soon.”

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As a part of Mozo’s commitment to making your money count for more, each month we “roundup” the rate changes, key banking trends and money moves in the Australian personal finance market. 

If you’d like to see the analysis in full once it’s released, you can subscribe to receive the Mozo Banking RoundUp here.

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