Australian banks’ sneaky move revealed after Reserve bank’s ‘super-sized’ rate hike
Our major banks wasted no time in passing on the full RBA rate hike to borrowers – but they’ve not been so quick to pass on savings.
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When the Reserve Bank dropped its rate rise bombshell this week, our major banks passed on the full hike within days.
But when it came to acting on savings accounts, the banking giants weren’t quite so hasty.
On Tuesday, the RBA caught the big four banks and Australia’s finance gurus off guard, announcing the official cash rate would rise a whopping 50 basis points to 0.85 per cent – the largest hike in a generation.
The super-sized rate rise – which was double the usual 25 basis point move the RBA traditionally favours – was passed on to borrowers in full by Westpac within hours, with CBA following suit the next day, and later by ANZ and NAB.
However, when it comes to customers’ savings, CBA announced it would pass on the full 0.50 per cent hike to its GoalSaver and Youthsaver accounts from June 17 – but the remaining three major lenders, Westpac, NAB and ANZ, have remained silent.
There has been some positive movement outside of the big four, with Macquarie and ING today announcing major increases to the interest rates on their transaction and savings accounts.
Macquarie Bank will be increasing the interest rate on its transaction account from 0.20 per cent to a market-leading 1.50 per cent on balances up to $250,000 from June 17.
Also today, ING has increased the interest rate on its Savings Maximiser account by 0.75 percentage points to 2.10 per cent on balances up to $100,000, effective June 15.
This is more than the RBA cash rate hike of 0.50 percentage points, however, the bank did not pass on the last hike in May.
The highest interest rate from a big four bank on their main transaction account is just 0.02 per cent from ANZ on balances over $100,000.
Meanwhile, CBA and Westpac do not offer interest on their main banking accounts, while NAB and ANZ offer 0.01 per cent and up to 0.02 per cent respectively.
RateCity.com.au research director Sally Tindall said Macquarie and ING have both upped the ante following Tuesday’s landmark double rate hike.
“Finally, we have some proof that competition in the savings sector isn’t dead and buried,” she said.
“ING and Macquarie have reset the battlefield for savings rates in what is ultimately a win for savers.
“CBA, Macquarie and ING have now all made significant increases on some of their most popular accounts. This will put pressure on other banks, in particular, Westpac, NAB and ANZ, to pass on this RBA hike to their savings customers.
“Customers sick of earning peanuts on their hard-earned cash would do well to shop around now the competition in the savings market is finally picking up.”
This week, analysis by Mozo revealed interest rates for at-call savings accounts – those that allow customers to access their cash at any time – were falling short, with banks holding back some of last month’s official interest increase from savers.
Mozo’s database shows there has been 144 increases to at-call savings rates in the past
month, with the big four bank average ongoing at-call savings rate still just 0.26 per cent, 114 basis points below the leading rate.
It also shows the average rate is only up 17 basis points from 0.33 per cent to 0.50 per cent since the start of May, well below the 25 basis point cash rate increase.
When it comes to the leading rates, Mozo found that Great Southern Bank is offering one of the highest rates at 1.40 per cent, while NAB and Westpac are offering the highest ongoing rate among the big four banks.
“There’s still not a lot of good news around for the nation’s savers with ongoing rates on some of the most popular savings accounts failing to fire,” Mozo spokesman Tom Godfrey said.
“At a time when cost of living pressures continue to hit home, if you’re trying to get a return on your cash, your best bet might be to consider a term deposit as at-call savings account rates are not showing many signs of life.”
Mozo’s database shows there have been 387 increases in term deposit rates since the May rate rise, with the average one-year term deposit rate now 1.36 per cent.
The highest one-year term deposit rate is now 2.90 per cent through AMP Bank, firstmac or Goldfield’s Money.
“If you don’t need to access your cash in the short term, term deposits might offer better returns than savings accounts,” Mr Godfrey continued.
“It seems clear deposit takers are continuing to build their capital reserves on the back of higher term deposit rates.
“With household spending increasing and the cash rate likely to continue to rise, it seems deposit takers are taking the opportunity to lock in their customers’ cash.”
Originally published as Australian banks’ sneaky move revealed after Reserve bank’s ‘super-sized’ rate hike
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