Westpac cuts savings rates again

Six banks, including Westpac, have reduced their deposit rates despite the RBA cash rate remaining unchanged.

Westpac and three of its subsidiaries have cut deposit rates again. Picture: Gaye Gerard

Westpac has slashed savings rates as more banks move to cut deposit returns despite the cash rate remaining unmoved.

The bank and its three subsidiaries Bank SA, St George, and Bank of Melbourne, as well as ME Bank and Great Southern Bank, chopped their savings rates on Friday.

The cuts come just two weeks after Commonwealth Bank also took the hatchet to its savings rate.

Analysis by comparison site RateCity finds 24 banks have cut at least one savings rate in the last month.

Westpac’s move to slice savings rates is the third time cut since the Reserve Bank of Australia lopped the cash rate in November last year in response to economic weakness from the Covid-19 pandemic.

Westpac cut 0.5 per cent from returns on its Life savings account for 18-29 year olds, reducing returns to 2.5 per cent.

RateCity research director Sally Tindall said despite the cuts by Westpac the bank still had the highest bonus interest offer on the market to young Australians.

“People need to be shopping around and reading the terms and conditions if they want the highest rates,” she said.

“With record levels of household deposits in the bank since Covid, it’s important to proactively look for a decent rate.”

Westpac has sliced its savings rates for the third time since the RBA cut rates in November. Picture: NCA NewsWire / Paul Jeffers

The bank also cut its all adults Life savings account returns by 0.1 per cent to 0.3 per cent.

Since November last year Westpac has cut returns on its Life and eSaver products by 0.45 per cent.

Westpac’s comparatively high savings rates have proved a boon for the bank in recent months.

Despite the huge run-up in home lending the bank was able to grow its deposit to loan ratio from 79.8 per cent in March to 80.2 per cent in June.

The recent spate of cuts to savings rate returns now sees banks offering on average just 0.3 per cent to all adults.

ING bank offers the highest ongoing savings rate for adults, at 1.35 per cent.

Ms Tindall said: “Across the board, savings rates continue to sink to new lows with 24 lenders cutting rates in just one month, including Australia’s two biggest banks.

“As a result, the average ongoing savings rate on RateCity.com.au is now just 0.30 per cent – the lowest in our records.”