the mozo blog

This is a round-up of rates in January and some may have changed since the time of writing. To check on today’s rate, click on the highlighted product

Home Loans:

There wasn’t much movement in home loan rates in January which was expected after all the activity responding to the two rate cuts last year.  Instead we saw some trimming of variable rates and jockeying for the title of lowest fixed rates.

Most of the variable rate action occurred in package rates rather than standard variable offerings. Non-bank lender Better Option joined the bunch of lenders matching UBank’s UHome Loan 6.14% rate, but new kid on the block, My Mortgage Freedom, retained the cheapest variable rate at 6.10%.

Previous market leader Greater Building Society increased its 1 year fixed package rate from 5.69% to 5.84%, leaving the best fixed rates for loans of $300,000 to Better Option, Newcastle Permanent and Reduce Home Loans – all at 5.79%.

Personal Loans:

Finally some movement in Personal Loan rates as the RBA cuts slowly start to flow through. Westpac seems intent on becoming more competitive in the personal loan space, cutting rates across its personal loan products.  The Westpac Personal Flexi Loan rate was slashed by 1.70% to 12.99% and its Unsecured Fixed rate was cut to 13.99%.

This still leaves them some way off the pace compared with other lenders though with a range of options near or below 13.0%. For example, Newcastle Permanent cut their Unsecured Fixed rate from 12.99% to 12.74%.

Credit Cards:

All of the competition in Credit Cards seems to be focused on low rate cards while customers with rewards credit cards have seen precious little of the RBA cuts.

Community First’s McGrath Pink Visa card is the only card on our site with a rate under 10% after they passed on both of last year’s RBA cuts. The card was at 10.49% but is now down at 9.99%. Of the major banks, NAB’s cut of 0.25% taking its Low Rate card to 13.24% is the only change we’ve seen. In the Rewards category Jetstar’s Mastercard rate was cut from 13.99% to 13.49%, although the rate reflects the card’s much lower earn rate than most cards with rewards.

Savings Accounts:

The biggest move in Savings Accounts during January was RaboDirect’s decision to return to offering an introductory rate. The RaboDirect High Interest Savings now pays 6.01% for the first four months, dropping back to 5.4% after that.  UBank headed in the opposite direction, shaving 0.1% off its headline rate to 6.01% (deposit conditions apply).

Overall we’ve had two cash rate cuts in the last 12 months totaling 50 basis points, yet the average rate on savings accounts has come down only 36 basis points, so there are still plenty of appealing deals on offer. Check them out using our Savings Account comparison tool.

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The banks have been making noises warning that they may not pass on future rate cuts so all eyes will be on the February RBA meeting today to see what they do. Regardless, from what we have seen over the past few months, many people with credit cards and personal loans have already been left in the cold with little or no benefit from falling rates.

This is a round-up of rates in December 2011 and some may have changed since the time of writing. To check today’s rates click on the highlighted product.

Home Loans:

The only lender that didn’t pass on the full 25 basis point RBA rate cut in December was RAMS which only passed on a 20 basis point reduction. RAMS has been busy repositioning itself as a full financial services provider with the launch of new deposit accounts late in 2011 (see the Savings Account section of this article for more).

UBank (the online subsidiary of NAB) currently offers the best variable home loan rate as its usual requirement of having the loan for 3 years to receive a loyalty discount of 0.20% continues to be waived. We’re not sure how long this will last, but applicants currently get the discount for the life of the loan with no waiting period meaning the variable rate is just 6.14%, compared with an average standard variable rate across the market of 6.94%. The offer is a little restricted though as their loans are only available to people refinancing and not new loans.

Fixed home loan rates stopped falling in December unlike previous months when we had seen quite large movements. The average 1 and 3 year fixed rate were down about 10 basis points, and there was virtually no movement in fixed rates from the major banks.

Personal Loans:

Despite the two rate cuts late last year there has been little benefit passed on to personal loan customers. The average secured variable rate loan has only moved down 11 basis points over the past year, and unsecured variable rates have actually gone up! The best rates are offered by credit unions, whether looking at secured or unsecured.

Credit Cards:

As for personal loans, credit card customers have every right to feel they are getting a raw deal. The average credit card rates barely moved in December and even over the longer term are fairly static. Last month this blog singled out QANTAS Staff Credit Union for an honourable mention, having passed on November’s rate cut to their credit card customers, and they’ve done it again in December. Its Lifestyle Rewarder is one of the cheapest credit cards with rewards on the market, now at 13.49%.

Savings Accounts:

The heat has certainly come out of the savings account market with the average rate down 39 basis points in December alone, although some of this decrease may have been due to delays in passing on the November rate cut.

The best introductory rate accounts are currently offered by RAMS (6.12% but only to RAMS home loan customers) and UBank (6.11%). Interestingly these are both owned by major banks – Westpac and NAB respectively – so it seems there is real competition between the majors, but through their alternate brands more than their own. ANZ is taking a different approach, offering the third best rate in the market of 6.00%, but through its own brand rather than its online Smartypig brand.

Term Deposits:

There are still some great term deposit rates to be found as they haven’t been falling as fast as either at-call deposits or home loans. If the RBA continues its downward movement of the cash rate over the next few months now might be a good time to pull some money out of at-call accounts and have some assurance of your interest rate.

The best 6 month rates at the time of writing were UBank’s 6.11% and ING Direct’s 6.00% while the best 1 year deposit rate is 5.50% offered by Police Credit Victoria and Credit UnionSA, and a range of others close behind. Check out our Term Deposit selector tool to find the best rates for the term that you’re interested in.

Although the RBA has a month off from meeting to review the cash rate in January the Mozo RateChasers will be keeping a keen watch to see if the banks are going to do the right thing and pass on the same reductions to credit card and personal loan customers as the have for those with home loans.

This Rate Chasers Roundup is a summary of rates movements in November 2011. To check today’s rates click on the highlighted product.

Home Loans:

Most lenders have now moved their variable rates following the Reserve Bank’s reduction in the cash rate early in the month. The only bank not to cut its variable rates by the full 25 basis points was NAB who, although still having the lowest standard variable rate of the big 4 banks (now 7.47%), only took 20 basis points off its rates. Perhaps to balance this NAB’s online subsidiary UBank has jumped in with one of the lowest variable rates around at 6.39% with its UHome Loan. Usually borrowers would have to pay 0.20% more than this for the first 3 years before qualifying for the ‘loyalty’ discount, but UBank is now offering this discounted rate to its first 1,000 successful applications.

Fixed rates continued to fall during the month with quite a few 1, 2 and 3 year options at around 6.0%. Better Option offered the best 1 year rate at 5.84% and the best 3 year rate at 5.89%, while Greater Building Society had the sharpest 2 year rate at 5.94%.

Personal Loans:

Unlike home loans, many personal loan rates have not yet benefitted from the Reserve Bank rate cut as evidenced by the average secured variable rate only coming down 8 basis points during November to 10.79%. The main area for competition in personal loans has been the fixed rates on secured loans where a number of lenders have passed on the full rate cut. Over the month we saw the average rate fall from 10.88% to 10.74%, with a range of offers coming in under 9%.

Credit Cards:

This is the product group that has benefited least from rate adjustments and during November the average rates barely moved. For credit cards with rewards the average rate went from 19.54% to 19.52%, and for cards without rewards the average rate went from 15.06% to 15.03%.

Qantas Staff Credit Union customers with its Lifestyle credit card have a reason to smile – its already low purchase rate of 13.99% was reduced to 13.74%, one of the few credit cards with a rewards program to feel the full effects of the lower cash rate.

Of the big banks, the only change we saw was ANZ cutting the rate on its Low Rate card by the full 25 basis points to 13.24%, although the rates on all of its other cards have not been adjusted.

Savings Accounts:

Unlike personal loans and credit cards, there’s been no hesitation in passing the rate cut on to savings account customers. During November the average rate fell by a neat 25 basis points, but this hasn’t been uniform across all products.

The market leaders for introductory rates for online savings accounts, UBank and Virgin Money cut their rates by 40 and 39 basis points respectively, leaving Virgin Saver on 6.12% and USaver on 6.11%. Both of these accounts are now beaten by HSBC’s Serious Saver on 6.20%, but as with all high introductory offers it pays to check what rates are paid beyond the introductory period.

Term Deposits:

As markets are anticipating more rate cuts and competition for deposits is easing, term deposit rates are continuing to move down.  Only small premiums are being paid for locking your money away for longer terms at the moment, making shorter terms seem the best value.

Over the last year the average rate for 6 month deposits has only fallen 9 basis points, however the average 1 year rate is down 71 basis points and the average 3 year rate has fallen 85 basis points.

For deposits of $10,000, the average 1 year rate is 5.22% but the best rate in November was QANTAS Staff Credit Union’s 5.70%.  For 3 year deposits the average rate is 5.34% and the best rate was 6.00% from Bank of Cyprus. Bank of Cyprus also payed 6.00% for 6 months.

The Mozo Rate Chasers will be keeping a close eye on whether the banks eventually pass the rate cut on to their credit card customers, and who benefits (and who misses out) if there’s another cut when the RBA meets on December 6. Whatever happens in the world of rates, we’ll have all the latest here.

Home Loans: Throughout October home loan fixed rates continued their downward march, with the Big Four (with the exception of Westpac) reducing their rates by up to 26 basis points. Two home loan providers, Better Option and Easy Street, both slashed their 1 year fixed rates to 5.89%, with Better Option also offering the same rate for 2 and 3 year terms. A new provider listed on Mozo, Mortgage Simple, came in with the market’s lowest variable rate at 6.57%.

Personal Loans: Over the last year, variable rates for personal loans have crept up with the average secured personal loan rate now 6 basis points higher, and unsecured rates a whole 39 basis points higher, perhaps reflecting an increased premium for risk. Greater Building Society sharpened its rates across all personal loans, reducing their unsecured fixed rate from 13.15% to 12.99% and now offering 8.99% for fixed new car loans.

Credit Cards: Credit card rates have been quiet recently with the only point of particular interest being Commonwealth Bank launching its Diamond Awards Credit Card. Diamond Awards has an annual fee of $425 and an interest rate of 20.74% for purchases, but you can earn up to 3 points per dollar when using the American Express card, and has a high points cap of 1 million per year.

Term Deposits: Anticipating the November RBA rate cut, term deposit rates moved sharply down. Looking over the last year paints a stark picture. While the cash rate rose 0.25% between October 2011 and a year earlier, average term deposit rates were down 0.53% for 1 year investments, 0.84% for 3 years, and 0.70% for five year terms.

Savings Accounts: In contrast to term deposits, at call deposit rates have been increasingly generous. As competition intensified the average rate went from 4.94% to 5.37% over the last year, an increase of 43 basis points compared with the cash rate’s increase of 25 basis points over the same period. Early indications are that this may not last with one of the main players, UBank, cutting its USaver bonus rate from 6.51% to 6.11% following the November 2011 cash rate cut.

Check back next month as we bring you highlights of the fallout from the latest Reserve Bank cash rate cut!

Across the market rates are heading south as anticipation increases that the RBA will move to cut the official cash rate when it meets on the first Tuesday in November, exactly one year since it last felt the need to adjust rates. During September the Mozo rate chasing data team started seeing the first real indications of this change in mood.

In home loans, fixed rates led the way down. At the end of September, the average 1 year rate was 6.62%, 28 basis points below where it was in August, and the average 3 year fixed rate 43 basis points lower to 6.59% over the same period. All of the major banks reduced their fixed rates in September – the biggest 1 year fixed movement was Westpac slashing its rate by half a percent to 6.69%, and NAB cut its three year rate by 45 basis points to 6.64%.

The best 1 year fixed rate for home loans of $300,000 is Greater Building Society’s 5.89%, 40 basis points lower than a month ago (which was then the lowest 1 year fixed). loans.com.au took the title of cheapest variable rate loan in the market with its dream catcher home loan, dropping from 6.69% to 6.58%.

Term Deposit rates are also on their way down, with both the market average and the best 1 year rate down by about 15 basis points. At the end of September the average 1 year rate was 5.54% and the best in the market was Beirut Hellenic Bank at 6.10%. The major banks are pulling their rates back too.  ANZ had the biggest drop in any of the big four 1 year rates over the month, a 42 basis point reduction to 5.18% .

Competition in the online savings account area has been running hot for the last year, and over the 12 months to the end of September the average Savings Account rate increased by 35 basis points, 10 basis points more than last November’s RBA cash rate increase. Going against the trend, and perhaps a sign of things to come, Westpac cut the rate on its eSaver by 50 basis points to 4.80%.

The only positive online savings rate movement Mozo saw in September was RaboDirect increasing its bonus rate offer on its High Interest Savings Account by 0.01% so it could claim equal best rate in the market (with UBank and Virgin Money) at 6.51%.