Banks pass on cash rate rise to borrowers, some savers to see rise

NAB, Westpac, and ANZ have all moved to raise borrowing rates after the RBA lifted the cash rate on Tuesday, but some banks are rewarding savers better than others as the need for cash grows across the industry.

NAB, Westpac, and ANZ have all moved to raise borrowing rates after the RBA lifted the cash rate on Tuesday. Picture: NCA NewsWire / Morgan Sette

National Australia Bank and Westpac were the first lenders to move on rates after the Reserve Bank moved to lift the cash rate on Tuesday, but both have also passed on the increase to savers.

The two banks said they would pass on the 25 basis points increase to borrowers, while some savers saw an even bigger bump.

Westpac said it would boost returns on Spend&Save accounts, which the bank offers to Aussies between 18 and 29, by 35 basis points, taking the total returns to 4.7 per cent.

ANZ followed NAB and Westpac late on Thursday, announcing it would up its lending costs but left the savings rate on its progress saver and online saver products unchanged. Only ANZ’s Plus Save account holders received a 25 basis points increase to 4.25 per cent.

RateCity research director Sally Tindall said ANZ’s move was “disappointing” and left most of the bank’s savers getting “just 0.85 per cent”. “People with a substandard savings rate should question their bank’s loyalty and consider whether they can do better elsewhere,” she said.

“This disparity in the highest and lowest savings rates, even within a bank, shows just how inequitable savings rates can be.”

Several other smaller banks announced they would move on rates throughout the day, with Macquarie passing through the 25 basis points increase to its growing borrowing book.

At its third-quarter trading update, Macquarie revealed its home loan portfolio had lifted 4 per cent since September 2022, topping $105.4bn.

But Macquarie stopped short of handing its savers the full rise, lifting its welcome rate on savings accounts from 4.5 per cent to 4.65 per cent for new customers with balances up to $250,000.

Ms Tindall said while banks had lifted savings rates, many were still behind the increase in the cash rate. “While these kinds of rates aren’t even within cooee of inflation, considering where they were just 10 months ago, this isn’t a bad result at all,” she said.

The Reserve Bank has raised the cash rate 10 times since April 2022, taking it from its record low of 0.1 per cent to 3.6 per cent on Tuesday. But Ms Tindall said banks were feeling the heat from criticism of record profits driven by rising home lending costs coupled with low savings returns.

“(The banks) have got political pressure from the government in the form of this ACCC inquiry, but it’s too easy to say it’s the ACCC inquiry at work,” she said.

“I think that this is a combination of a pressure from the market, the banks need deposits at the moment they need money coming in the door.”