Mozo Money Moves: It’s raining rate cuts! A storm of changes sweep across the Mozo database

As interest rates continue to dominate the headlines after the Reserve Bank of Australia (RBA) cut the cash rate last week, Mozo’s database has been flooded with a downpour of thousands of rate changes across savings and home loan products. 

This week, we explore the impact of these rate cuts on mortgage holders (many of which come into play today), tumbling deposit rates, the big banks shift to offering multiple offset accounts and a growing trend of banks cutting base rates and keeping bonus rates high.

Plus, we share the latest Mozo analysis that highlights the growing trend of Australians heading into retirement with home loan debt, and the risk of taking out a 40 year mortgage - even with a much lower rate.

24 lenders slash home loan rates

Today is an exciting moment for home loan holders, with 16 lenders passing on the RBA's recent rate cut, including Australia’s biggest lender when it comes to owner occupier home loans.

A total of 24 lenders have now made adjustments, offering some relief to homeowners who have been feeling the pinch from higher rates. Among them, three of the Big Four Banks—CommBank, NAB, and ANZ—have all cut their variable home loan interest rates by 0.25% p.a., effective today.

In addition to the major banks, other key lenders are also following suit. Macquarie, Bankwest, Ubank, ANZ Plus and Suncorp are also lowering home loan rates by 0.25%, bringing some welcome news to borrowers. 

Firefighters Mutual Bank, Health Professionals Bank, Homestar, Police Bank, Resi, Sucasa, Teachers Mutual Bank, and UniBank, are passing on the rate cut in full as well.

Not to be left out, Unloan, Ubank, Bank First, Defence Bank, Gateway Bank, and Transport Mutual Credit Union moved before the crowd, passing on the 25bps cut to home loan holders and Qudos bank is passing on cuts between 20-25bps.

There will be another 42 lenders passing on rate cuts to borrowers next week ( between 1 - 7 March 2025), including the final Big Four Bank, Westpac.

“These home loan cuts give borrowers a further range of options to take advantage of lower repayments – or, to keep repayments the same and pay off their mortgages faster,” says Rachel Wastell Mozo's money expert.

“For mortgage holders who have been able to manage making these higher repayments, keeping repayments the same despite a lower interest rate could shave thousands of dollars off the total cost of their loan.”

What a 0.25% cut looks like in repayments:

CBA cuts fixed rates, but still trails behind. 

While NAB and Westpac passed on their fixed rate cuts ahead of the RBA’s announcement, CBA made its move today. CBA has updated its fixed rates for Owner-Occupier, Principal & Interest loans, cutting rates by 0.30% for 1-2 year terms and 0.15% for 3-5 year terms.

This update brings CBA into the fold after earlier adjustments by NAB, ANZ, and Westpac. However, ANZ has yet to announce any fixed-rate cuts in 2025. 

While CBA has made its move, it hasn't taken the lead in the Big Four fixed-rate race.

Big Four Banks Fixed Rate Cuts

Savers feel the pinch as deposits tumble

Along with the recent home loan rate cuts, savings rates are also falling, leaving depositors with smaller returns. Following the RBA's 0.25% rate cut last week, several banks have reduced their savings account rates, impacting base, bonus, and introductory rates across multiple products.

Three of the Big Four banks — ANZ, Westpac, and CommBank — have reduced their savings account rates today, following NAB’s move to cut rates last Friday. 

ANZ has reduced rates by 0.25% on the ANZ Online Saver, Progress Saver, Pensioner Advantage, and SMSF Cash Hub accounts. ANZ’s digital brand ANZ Plus has cut its Save account’s base rate by -0.10% and bonus rate by -0.15%, and its ANZ Plus Flex account by -0.25%.

Westpac also announced reductions today, cutting the introductory rates on its Life Savings, cutting the base rate by 0.25% and leaving the bonus rate unchanged and eSaver accounts by 0.25% (0.10% cut to the base rate and 0.15% to the intro rate)

CBA’s adjustments across several products were similar. The Youthsaver got a larger cut to the base rate (-0.20%) compared to the bonus rate (-0.05%), the GoalSaver experienced a bigger reduction to the bonus rate (-0.20%) than the base rate (-0.05%), and the NetBank Saver had a 0.20% cut to its introductory rate and the base rate. In addition, the Business Online Saver accounts were cut by up to 0.10%, depending on the balance.

Other banks making savings cuts today include Macquarie, ING, Bankwest, Bank SA, Bank of Melbourne and St George and there have been a number of other changes to term deposits that would be impossible to cover in a single column. 

So if you want to keep up to date with who is cutting and by how much, head to Mozo live - where our editorial team is sharing the latest rate changes on the Mozo database.

Base rates drop and savers could be punished

Something to note that Mozo has been noticing when it comes to the savings space is the growing trend for banks to keep bonus rates high, and slash the base rates – that is the rate of interest savers will earn if they don’t meet the bonus conditions.

As mentioned above, both CBA and Westpac have cut the base rate of interest more than the headline rate of interest on at least one savings account.

ING has also slashed its base rate by 0.50%, leaving it at a very low 0.05%. This move follows similar actions by Big Four banks Westpac and ANZ that Mozo tracked last year, where they cut the base rates while maintaining higher bonus rates. 

“By cutting the base rate but keeping the headline rate high, banks are maintaining the appearance of a competitive offer, but savers may find it harder to meet bonus conditions and earn the full rate,” explains Wastell.

According to the ACCC “in the first 6 months of 2023, we observed that, on average, 71% of consumers did not meet the bonus rate conditions in any month.”

“Even if the headline rate is over 5 percent, getting stuck with a very low base rate could leave savers feeling the sting.” 

“Bonus rates can be attractive if you meet the conditions, but if you don’t – you’re missing out on most of the interest you think you’re getting.”

ANZ only big four not to offer multiple offsets

In other news, on Monday, NAB launched a new feature allowing homeowners to create up to 10 offset accounts to reduce the interest on their home loans. This follows Westpac’s similar move in February, just after the RBA's first rate cut in over four years.

“NAB joins Westpac and CBA in offering multiple offset accounts, but out of the Big Four banks, ANZ is yet to follow suit. If your bank isn’t keeping up, it might be time to rethink who you bank with,” says Wastell.

“Offset accounts are one of the most underrated tools for homeowners - and with multiple offsets, you can bucket savings for different goals, all while reducing the interest on your home loan.’

With interest rates top of mind, these features can make a real difference. Recent Mozo research found that 41% of homeowners don’t know their current interest rate, so it’s crucial to highlight ways mortgage holders can save on interest.

“With the RBA’s rate cut, homeowners need to pay attention to their rates and loan features. If you don’t know your rate, you’re flying blind. Now’s the time to take charge and save on interest.”

More Aussies carrying home loan debt into retirement

On Thursday, to see how homeownership has evolved and how many older Australians either in retirement or reaching retirement age still have a mortgage – Mozo went into the  Australian Bureau of Statistics (ABS) archives to compare the most recent data (released in May 2022 that covers the 2019-20 financial year to the 2009-10 financial year) to see how it had shifted over the past ten years.

Looking at the table below you can see a growing trend of Australians retiring with mortgage debt, particularly among older age groups. 

% of Australian Homeowners with a Mortgage - 10 yr shift

Over the past decade, mortgage debt has become a bigger burden for older Australians –more Aussies are now carrying home loans into retirement.

The biggest shift? A 44.1% jump in mortgage holders aged 65-74, and a 36.9% increase in the percentage of owners with a mortgage aged 55-64. 

Younger Australians are facing a similar challenge, as the number of Australians aged 15-25 owning a home has dropped by 43.8% and mortgage holders aged 25-34 also dropping by 8.5%.

"Skyrocketing house prices are making it harder for homeowners to pay off their loans before retirement. With the median dwelling price now pushing close to $1 million, many Australians are borrowing more, stretching out repayment terms, and adding years to their mortgage burden," says Wastell.

“With high property prices and limited availability, this is also impacting first homebuyers, who are now  entering the market later in life. This means they're carrying mortgage debt well into their retirement years."

“Retirees focus on superannuation balances and pension eligibility, but it looks like there’ll be an increasing number of Aussie retirees adding ‘how do I get rid of my mortgage?’ to their retirement checklist.”

The costly risk of a 40 year mortgage

While recent commentary has suggested that longer loan terms can help borrowers get their foot on the property ladder sooner, it’s important to remember that a home loan is likely the biggest debt an Australian will ever take on, and can be a very costly risk.

Lower monthly repayments may sound attractive, but the long-term costs can leave many borrowers with a much heavier financial burden down the track.

Extra Interest Paid -- 20 vs 40 years with a 1.05%p.a. lower rate

Mozo analysis shows that even if 40 year mortgages offered 1.05% lower rates of interest, extending a $400,000 home loan term from 20 years to 40 years could cost the mortgage holder $235,000 more in interest over that loan term.

When looking at an $800,000 loan, that extra interest paid over the 20 additional years jumps to almost half a million dollars.

“The longer the loan, the more you pay in interest,” says Wastell. 

“The trade off for a lower home loan rate, even one a whole percentage point  lower, so the total of four RBA rate cuts, just isn’t worth it when it comes to adding on over a decade to your home loan term.”

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. 

Make sure you don’t miss out on the latest in banking news by signing up for Moneyzone and 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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