Banks have failed to pass on interest rate increases on savings accounts, despite lifting mortgage rates independently of the Reserve Bank move earlier this month, new research shows.
RateCity found that of more than 200 savings accounts in the market, just one institution has raised its savings rate with HSBC lifting its Serious Saver account rate by 15 basis points to 5.95 percent. Meanwhile, 22 lenders have increased variable home loan interest rates at the time of writing, since the RBA’s decision to leave the cash rate on hold at February 7.
Damian Smith, chief executive of RateCity, says many Australians don’t have mortgages, and rely on the interest from savings accounts, especially with the volatility in the stock market.
“This group seems to have missed out on rate rises, and in fact they’ve also seen rates come down in November and December; by 46 basis points on average,” he says.
Online savings accounts pay 4.13 percent interest p.a. on average, which is about 71 basis points less than six months ago and 121 basis points less than the February 2011 average rate. However, there are high-yield cash options available; online savings account rates range up to 6.01 percent when certain conditions are met, says Smith.
“It’s important that people compare online regularly, because not only do rates change, but also bonus conditions can change also,” he says.
Mortgage rate moves
The RateCity database reveals 14 banks and eight non-banks have lifted variable home loan interest rates by an average of 10 basis points since the last Reserve Bank met this month. Most variable rate borrowers will likely be paying an extra $19 per month for a $300,000 mortgage, as a result.
ANZ Bank was the first of the major banks to announce its intention to raise variable home loan rates this month, lifting by 6 basis points. NAB later announced its variable rates would increase by 10 basis points while Commonwealth and Westpac banks announced their variable mortgage customers would face 10 basis point hikes.
“What’s also interesting is that nine lenders have increased their three-year fixed rate home loans; the most popular choice by borrowers; since February 7,” says Smith. “While we counted five lenders that have dropped their three-year fixed rates by an average of 10 basis points, those that have increased were by as much as 39 basis points.”