Australians are being urged to consider “breaking up” with the big banks as smaller players rush to pass on higher savings rates after the latest mortgage bill squeeze from the Reserve Bank.
“The cash rate has now gone up 12 times in just over a year and yet Westpac is still offering its existing customers just 1.10 per cent,” RateCity research director Sally Tindall said.
“The hits keep on coming for households burdened with a mortgage, with all big banks now confirming they will be passing this latest hike on in full.”
But almost a dozen lenders are now offering more than 5 per cent to savers, with ING Bank on Monday unveiling a new market high 5.5 per cent rate, according to the analysis firm.
The move, which will be effective from June 14, is one of 10 rate changes since the RBA hiked rates in June last week, as smaller lenders rush to beat the big banks for the best savings rates.
“At 5.50 per cent, this [new ING] rate is still below inflation, but the target is now finally within striking range,” Ms Tindall said.
“ING’s move puts pressure on its competitors to pass on the RBA’s 12th cash rate hike to savers.”
The best rates on the market all come with various conditions, including deposit minimums, balance increase requirements and – in the case of ING – needing to use its debit card.
But at 5.5 per cent, ING’s offering is far higher than the 4.65 per cent GoalSaver from Commonwealth Bank, which also requires depositors to increase their balance each month.
CBA does have a savings account that’s a touch higher at 4.75 per cent, but that’s only for five months, after which the rate reverts to a measly 2.2 per cent.
Ms Tindall said the big banks are again being sluggish to increase savings rates, despite being quick to pass through RBA rate hikes to mortgage holders over the past 13 months.
And they’re not alone.
Just 10 of more than 90 different banks in the market have raised savings rates since last week.
“That’s a pretty disappointing result so far,” Ms Tindall said.
Commonwealth Bank has decided to pass through the June rate hike in full to all of its key savings accounts, which is more than can be said for NAB, which is raising just one account.
Westpac and ANZ, meanwhile, have yet to announce any increase for savers, RateCity said.
The only savings account at 5 per cent among the big four is Westpac’s Spend&Save account.
But it’s only available for 15- to 29-year-olds and requires balance growth with at least five transactions on a linked bank account.
By comparison, Bank of Queensland’s future saver, which is similarly available to 14- to 35-year-olds and has its own conditions, was offering 5.3 per cent before the June rate hike.
It all comes after Treasurer Jim Chalmers attempted to pressure the big banks into ensuring savings rates keep up with mortgage rates earlier this year, even requesting the consumer watchdog set up an inquiry.
That report is due by the end of the year, but in the meantime Ms Tindall said it’s a good time for Australians with big four online savings accounts to think about “breaking up” with their bank.
At the very least, Australians should consider switching accounts within their current bank.
