Mozo Money Moves: Weekly Financial Update
Welcome to Mozo Money Moves, your go-to source for understanding the latest shifts affecting the financial landscape. In this week’s edition, we focus on the changing dynamics in home loans, government initiatives like the Home Guarantee Scheme, and new tools designed to enhance savings and business operations. As the Australian financial environment shifts, let’s unpack these developments in detail.
Expansion of the Home Guarantee Scheme
The federal government has decided to broaden access to its Home Guarantee Scheme (HGS), with new measures designed to assist more individuals in accessing the property market. The HGS facilitates home loans for borrowers by allowing them to secure loans with a deposit as low as 2% to 5%, effectively eliminating the burden of Lenders Mortgage Insurance (LMI).
Starting from October 1, 2025, this scheme will undergo significant modifications. Notably, the annual cap on the number of scheme places will be eliminated, increasing eligibility for homeowners. Additionally, income thresholds for applicants will be removed, making the program accessible to a wider demographic.
Property value caps are also set to rise. For instance, in Sydney, the cap will increase to $1.5 million while Melbourne will see its limit go up to $950,000. Moreover, the Regional First Home Buyer Guarantee will now be integrated into the broader First Home Guarantee, which streamlines access for regional buyers.
Although the reforms aim to lower entry barriers for aspiring homeowners and present a more affordable alternative for financing, they are not without criticism. Experts like AMP’s chief economist Shane Oliver caution that increased demand in an already competitive housing market may inadvertently raise property prices. This could compel first-home buyers to take on larger loans, which may lead to significant debt burdens.
Record Surge in Home Loans
The Australian Finance Group (AFG), which maintains a network of over 4,200 mortgage brokers, has reported unprecedented demand for home loans reflecting a revitalizing housing market. AFG’s CEO, David Bailey, indicated that a mix of declining interest rates, strong buyer enthusiasm, and limited housing supply has kept the activity high.
In fact, July 2025 was marked as AFG’s busiest month, recording over $10 billion in new loan applications. For prospective homebuyers, lower interest rates mean reduced borrowing costs, while sellers find themselves in a strong position due to sustained demand. However, the limited housing supply continues to present challenges, especially in major cities, where demand often outweighs available properties, pushing prices upwards.
Fixed Home Loan Rates Below 5%
A significant shift has occurred in the fixed home loan sector, with rates now dipping below the 5% threshold. Numerous lenders are trimming their offerings, creating a more favorable environment for borrowers.
According to Mozo’s latest updates, banks such as CBA have reduced selected three-year fixed rates by up to 45 basis points, while HSBC has brought its two-year fixed rate down to 4.99%. Other banks like Suncorp and Westpac have also made substantial cuts, demonstrating a more competitive lending environment.
Borrowers benefit from the re-emergence of fixed rates below 5%, providing a degree of financial certainty amid ongoing discussions about variable rates.
Insights from the RBA on Productivity Challenges
While consumers experience a temporary relief due to lower mortgage repayments, the Reserve Bank of Australia (RBA) has issued a warning regarding slowing productivity growth, dropping its forecast from 1% to 0.7%. This change translates to an anticipated $30 billion reduction in economic output over the next two years, indicating that while interest rate cuts provide immediate relief, they do not resolve deeper structural issues within the economy.
With unemployment at 4.2% and core inflation at 2.7%, the RBA highlights the need for a data-driven approach in future rate decisions, emphasizing ongoing monitoring of economic indicators for policy adjustments.
Market Reactions to Inflation Fluctuations
Following an unexpectedly high July inflation rate, CommBank economists advise against panic. The increase in headline inflation to 2.8% is attributed to one-time factors rather than a long-term trend. The bank maintains that the RBA’s cautious, data-focused strategy will remain unchanged and anticipates a potential rate cut in November.
Financial Product Comparisons
Amid these developments, Mozo has launched a new series of head-to-head comparisons for various financial products. One standout competition is between Judo Bank and the Big Four banks in terms of term deposits. Judo Bank offers competitive rates and lower deposit requirements, appealing to a diverse range of savers.
Similarly, in the superannuation space, Aware Super and UniSuper, both leading profit-for-member funds, are analyzed for their offerings. Aware Super tends to attract more passive investors through their lifecycle strategy, whereas UniSuper caters to those who prefer a hands-on investment approach.
Selecting the Right Savings Account
As the RBA continues its policy of rate cuts, the discussion surrounding bonus vs. unconditional savings accounts becomes more significant. Bonus saver accounts often tie interest rates to meeting specific criteria, while unconditional accounts offer a simpler, straightforward saving method without added conditions.
Innovations in Cashback and Exchange Rate Solutions
Finally, ING has introduced a new cashback feature, Pocket Perks, which simplifies the rewards process for customers. This automatic cashback program allows users to earn returns simply by using their linked cards, foregoing complicated point systems.
Additionally, OFX has unveiled a digital-forward service designed to help small to medium enterprises safeguard against currency volatility. This platform allows businesses to lock in favorable exchange rates for future transactions, thereby simplifying financial forecasting in uncertain economic times.
In conclusion, the Australian financial landscape is dynamic, marked by significant shifts in home loans, evolving government initiatives, and an increasing trend toward automated financial solutions. By staying informed, consumers can make well-advised decisions that align with their financial goals.
