Westpac shaves interest rates on savings accounts

Westpac is the latest major bank to cut interest rates across a slew of deposit accounts.

Even after these cuts, Westpac is still at the top of the big four pack, with the highest ongoing savings rate Picture: AAP

Westpac is the latest major bank to inflict further pain upon savers, shaving applicable savings rates across a slew of its deposit accounts.

The country’s second-largest bank on Friday cut rates by up to 25 basis points across its standard, conditional and term deposit accounts, adding to the growing number of savings products accruing next to no ­interest.

Westpac is the last of the big four banks to move on slashing savings rates, following the emergency cash rate cut by the Reserve Bank in March because of the coronavirus pandemic.

Data obtained by RateCity highlights more than 70 Australian banks have lowered savings rates to customers, with over 900 term deposit accounts being clipped since March 19. All four major banks now offer an ongoing rate of 0.05 per cent on standard savings accounts.

Westpac’s five-month introductory rate on its standard eSaver account has been reduced by 25 basis points to a rate of 1.05 per cent, with an ongoing rate of 0.05 per cent thereafter.

Westpac’s Life deposit account was dropped 25 basis points, with the conditional savings product holding a maximum rate of 1.05 per cent if the balance of the account grows every month.

Westpac’s conditional account still holds the highest base rate compared with any other major bank, at 0.4 per cent.

ANZ has the lowest base rate at 0.01 per cent, while Commonwealth Bank offers a base rate of 0.1 per cent and NAB 0.05 per cent.

Term deposit rates of less than 12 months have been lowered between 10 and 20 basis points, while rates on deposits longer than 12 months remain unchanged.

Out of the major bank’s, NAB offers the highest 12-month deposit rate at 1.35 per cent, followed by CBA at 1.3 per cent. Westpac’s rate stands at 1.2 per cent, while ANZ is offering a 1 per cent return.

RateCity research director Sally Tindall said the hit to Westpac savers had been just a matter of time, as higher savings rates would probably further drag down the group’s net interest margin.

“Westpac’s savings cuts see it fall into line with the other big four banks, despite holding firm for almost two months,” Ms Tindall said.

“Even after these cuts, Westpac is still at the top of the big four pack, with the highest ongoing savings rate of 1.05 per cent.”

A Westpac spokeswoman confirmed that savings, conditional and term deposit accounts had experienced a rate drop between 10 and 25 basis points.

“We are continuing to face commercial pressures in the low interest rate environment, and in making this decision took into account multiple factors and stakeholders,” she said.

While major banks are still ­offering minuscule returns, Ms Tindall noted some savings products within the banking industry were advertising 0 per cent rates.

“I struggle to see how they can call them ‘savings’ rates at 0 per cent,” she said.