Banks lift deposit rates amid political pressure

Big banks have lifted some of their interest rates on deposit products amid political pressure on lenders to pass on the benefits of higher rates to long-suffering savers.

Following Tuesday’s 0.25 percentage point increase in official interest rates, Prime Minister Scott Morrison on Wednesday morning called on banks to lift their deposit rates for retirees in particular, saying it was a matter of fairness.

Deposit rates have plunged during the pandemic.Credit: Josh Robenstone

“Self-funded retirees have been doing things tough. They’ve been pushing through this pandemic like so many others have. And my message to the banks is to give them a fair go,” Morrison said.

RateCity this week said the average maximum savings rate among the big four banks had plunged 1.27 percentage points during the pandemic to 0.23 per cent.

While Morrison said there was no way to “force” banks to raise deposits, he stressed he was encouraging the banks, following confirmation by all four major lenders that they would pass on the interest rate hike to borrowers in full.

Following the comments, ANZ and Commonwealth Bank both on Wednesday announced plans to increase interest rates on specific deposit products, though CBA's product was a term deposit. These changes followed earlier moves by Westpac and National Australia Bank to also raise some deposits.

Unlike changes in variable mortgage interest rates, which are typically announced by banks soon after an RBA move, changes in deposit interest rates can take longer to be announced, as lenders assess the competitive landscape.

ANZ, which also unveiled its profits on Wednesday, said it would bump up bonus interest rates on its Progress Saver by 0.25 percentage points. This move means that if customers deposit at least $10 into this product, they will receive a total interest rate of 0.4 per cent.

Commonwealth Bank on Wednesday afternoon announced a special of 2.25 per cent for its 18 month term deposit, an increase of 1.95 percentage points. The offer is open to savers with between $5000 and almost $2 million. Group executive for retail banking Angus Sullivan said: “We hope this special rate will provide some support for savings customers who have had a challenging couple of years.”

On Tuesday night, Westpac said it would increase rates by 0.25 percentage points for three deposit products including one aimed at retirees. On Wednesday morning before Morrison’s comments, National Australia Bank increased its bonus rate for reward saver accounts by 0.25 percentage points.

NAB’s group executive for personal banking Rachel Slade said: “While we have 930,000 home loan customers, the historic low interest rates have been difficult for our savings and deposit customers, including more than 1.3 million customers with a reward saver account.”

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