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Final big bank alters savings rate
The last of Australia’s big four banks has announced a reduction in its savings rates following the historical lowering of the country’s official cash rate.
Final big bank alters savings rate
The last of Australia’s big four banks has announced a reduction in its savings rates following the historical lowering of the country’s official cash rate.
The Commonwealth Bank of Australia has announced that it has cut its online savings rate by 0.15 per cent, putting them on par with the other major banks.
Commenting on the major banks’ moves, Canstar’s finance expert Steve Mickenbecker said retirees will be significantly worse off with rates continuing to fall.
“Self-funded retirees now have to look back nine years for their last pay rise, when the Reserve Bank increased the cash rate to 4.75 per cent,” he highlighted.
“In 2010, the base rates for savings accounts with the major banks averaged at approximately 4.50 per cent, just 0.25 per cent below the cash rate,” Mr Mickenbecker outlined.
Now, with rates of 0.15 per cent and 0.11 per cent, he flagged that the major banks miss the cash rate mark by 0.85 per cent and more.
Falls since the start of January
Canstar research showed that since the start of 2019, investors have lost between 0.2 and 0.54 per cent on their base and bonus saving interest rates due to rate reductions:
- ANZ’s progress saver offered 2.40 per cent interest at the beginning of the year and now sits at 1.95 per cent, down 0.45 of a percentage point.
- Commonwealth Bank’s goal saver was 1.65 per cent back in January and currently sits at 1.15 per cent, a difference of 0.50 of a percentage point.
- NAB’s reward saver was previously offering 2.40 per cent interest, with this figure now sitting at a markedly lower 1.86 per cent, having fallen by 0.54 of a percentage point.
- Westpac’s life account offered 2.30 per cent interest at the start of 2019 and currently sits at 2.10 per cent, having dropped just 0.20 of a percentage point.
Breaking up with the big four
If further rate cuts eventuate, Mr Mickenbecker said investors may move away from the big four banks towards other ADIs.
“With commentators expecting another 0.25 percentage point cut to the cash rate this year, savers are now on a zero interest rate trajectory,” he stated.
Calling the trajectory “too much of a crash landing” for some savers, he noted that they may look for a smoother flight path elsewhere, with interest rates offering up to 1.95 per cent still available from some of the smaller authorised deposit-taking institutions.
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