Some of Australia’s big banks are posting gargantuan profits this week as rising mortgage bills fatten their coffers.
But the millions of Australians who trust them with their savings still aren’t reaping the full rewards, with savings rates only being lifted selectively in May despite the Reserve Bank lifting interest rates.
All the big four banks rushed to pass that latest 0.25 percentage point increase to mortgagees this week, but on Friday Commonwealth Bank announced it would only increase the ongoing rate of its NetBank saver account by 0.10 percentage points.
It followed earlier moves by Westpac and NAB on Thursday, with only select saving accounts receiving the full May rate increase while others saw no changes.
Westpac did, however deliver a 0.30 percentage point boost for 18- to 29-year-olds.
ANZ Bank, which pleased investors on Friday by unveiling a record $3.82 billion interim profit, increased rates on just one of its three savings accounts.
In fact, the bank is still only offering a 1.1 per cent ongoing rate to its online savers, after a three-month introductory period priced at 2.9 per cent.
Banks ignore Treasurer
All this came despite Treasurer Jim Chalmers once again chiding the big banks this week for failing to pass on rate hikes to savers.
He told reporters in Canberra on Friday that banks failing to take care of their customers was a key point of frustration for Australians.
“When they are doing well, when they’ve got these big profits, all the time, frankly, they need to do the right thing by their customers, too,” he said.
An Australian Competition and Consumer Commission (ACCC) probe into bank interest rates is already underway, but Dr Chalmers said on Friday that there are no plans to introduce tougher regulations.
One key reason the banks have been slow on hiking savings rates is because they had ample access to cheap funding during COVID-19, which made additional savings less valuable to their bottom lines.
That’s changing as interest rates rise, but it’s happening slowly, with the big banks still able to be selective about which rates to increase.
RateCity research director Sally Tindall said major banks are still picking and choosing which of their savers get a boost from RBA rate hikes.
“Westpac is serving up a generous 0.30 percentage point hike for young adult savers, to take this rate to an impressive 5 per cent,” she said.
“Yet its existing eSaver customers are still stuck in neutral on just 1.10 per cent.”
Make the switch
As things stand, Australians can find savings rates much higher than those at the big banks, with 4.5 per cent to 5 per cent being offered with a few relatively straightforward terms and conditions by other banks.
“If you’ve got your cash sitting in a savings account, don’t just assume your bank is passing on these RBA hikes in full,” Ms Tindall said.
“Check your rate and if it’s earning an ongoing rate of less than 4.5 per cent, then it could be time to switch.”
While you’re at it, you might want to consider refinancing your home loan as well, alongside a record-breaking number of other families.
Figures published on Friday by the ABS showed $21.2 billion worth of home loans were refinanced in March as Australians change up their mortgages to avoid the worst of rapidly rising interest rates.
