Home loan rates rising while savings rates remain rock bottom at the big banks

Home loan rates are going up but many savings accounts are lagging. Here’s where to get the best deal.

Home loan rates are going up but many savings accounts are lagging with loyal customers in some of the most common products offered by the big banks being dudded the most.

Savers are being urged to shop around as the gap between the rate of interest paid on savings accounts offered by the big four and market leaders widens.

Banks have been quick to pass on interest rate rises on to home loan borrowers since the Reserve Bank began hiking the cash rate in May.

But an analysis of savings accounts carried out by RateCity for the Herald Sun shows some of the nation’s most popular products have not moved from paying rock bottom interest rates.

Among the least generous is Westpac’s eSaver.

The bank is still offering existing customers an ongoing rate of just 0.05 per cent – the same rate the nation’s second-biggest bank was paying before the RBA hiked the cash rate by 1.25 per cent.

The Reserve Bank of Australia hiked the cash rate by 1.25 per cent.

Westpac’s rate compares to the 0.3 per cent being paid by the CBA NetBank Saver, NAB iSaver and ANZ Online Saver.

Better big four rates can be found among bonus savings accounts, although these require savers to meet certain terms and conditions such as ensuring the balance is higher each month.

The Westpac Life bonus savings account pays up to 1.35 per cent, the CBA GoalSaver 1.25 per cent, the ANZ Progress Saver 1.15 per cent while NAB emerges as the laggard with its Reward Saver is paying just 1 per cent.

The best deals are found outside the big four.

The ING Savings Maximiser and Virgin Money which are paying 2.6 per cent, although the Virgin product requires customers to provide 32 days notice of a withdrawal.

Other leading savings accounts are ubank Save which is paying 2.35 per cent and AMP Bank which is paying 2.1 per cent.

The highest savings rate with no monthly terms and conditions is ANZ Plus Save account which will pay 2 per cent from July 15, up from 1.5 per cent.

Home loan rates are going up but many savings accounts are lagging. Picture: Damian Shaw

Australia's biggest bank has warned proactive steps must be taken now. Picture: John Gass

Macquarie’s transaction account will also pay 1.7 per cent from July 14.

RateCity research director Sally Tindall said banks have been picking and choosing which savings accounts to increase interest payment on, turning the market into “a dog’s breakfast” for consumers.

“While the banks haven’t hesitated to pass on the rate hikes to variable mortgage customers, it’s a different story for savers,” she said.

“The RBA rate hikes will keep rolling in over the next six months. While this should be welcomed news for savers, people should stay on their toes to make sure their bank is doing right by them. If your bank hasn’t passed on the full hikes to your savings account, pick up the phone and ask them why?”

Ms Tindall urged savers to shop around for the best deals and check the fine print on terms and conditions.

“Look for a savings account that fits in with your lifestyle – if you don’t think you can meet the terms and conditions easily, look for a different account,” she said.

“Do a health check on your savings account at least once every couple of months to make sure it’s keeping up with the competition.”