No RBA cut likely, yet banks keep stinging savers

Savers are continuing to be stung by falling interest rates even though the Reserve Bank isn’t expected to cut the cash rate today.

RateCity.com.au analysis shows in the last month:

• More than 40 banks cut saving account rates, including CBA, Macquarie Bank and AMP.
• Average cut was 0.19 per cent.
• Average ongoing savings rates is now 0.59 per cent.

RateCity.com.au research director Sally Tindall, said: “complacent savers are earning next to nothing in this low rate environment.”

“Seventy-six per cent of all household deposits are held by the big four banks, yet they’re the ones offering some of the lowest ongoing savings rates on the market.

“Customers earning 0.05 per cent on their hard-earned cash should pick their savings off the floor and move to a higher rate.”

RateCity.com.au analysis shows if a big four bank customer with a $50,000 balance moved from 0.05 per cent, to the highest ongoing rate on the market of 1.65 per cent, they could earn an extra $806 in interest in 12 months, provided they met the terms and conditions and interest rates remained the same.

“The only big bank bucking the trend is Westpac, which is stumping up an impressive 3 per cent for customers aged 18 to 29,” she said.

BANKS FLUSH WITH CASH - APRA

Savings rates have been plunging at the same time deposits have hit an all-time high. The latest APRA statistics show the total bank deposits from household increased by $64.4 billion since the start of COVID-19 (March 2020) and $100.4 billion year-on-year.

Tax refunds, the second round of COVID super payouts and months of low-cost lockdown living have contributed to the increase in deposits this July.

“Deposit are at an all-time high, which makes it even harder for banks to offer decent savings rates. They don’t need to attract new savers – they can’t even afford to offer respectable returns to the customers they’ve got.

“Macquarie Bank last week slashed its introductory rate by 0.50 per cent to 1.50 per cent while AMP terminated its welcome rate altogether,” she said.

APRA monthly banking statistics: deposits from households

Deposits from households on the books of Authorised Deposit Taking Institutions (ADI's). Source: APRA Monthly Banking Statistics, July 2020, issued 31 August 2029.

Big four bank savings changes

The average big four bank conditional savings rate has dropped to 0.92 per cent in the last year, while the cash rate has dropped by 0.75 per cent.

Big four bank conditional savers: then and now

Source: RateCity.com.au. Based on a balance of less than $50K. CBA has higher rates for higher balances. Based on accounts with no age restrictions.

Big four bank standard savers: then and now

The average big four bank introductory rate has dropped by 1.12 per cent while the ongoing savings rate has dropped by 0.09 per cent.

Source: RateCity.com.au Intro rate terms - CBA & Westpac 5 months, NAB 4 months, ANZ 3 months.

*Average rate of the savings accounts on RateCity.com.au assuming intro rates have expired, and that monthly terms and conditions are met and excludes accounts with age restrictions.

Compare home loans in Australia