Millions of Australians remain unclear about their savings interest rates following the Reserve Bank’s recent cash rate cut. Westpac has been the only major bank to disclose its changes to savings rates, while ANZ, NAB, and Commonwealth Bank have withheld information, although they are anticipated to reduce their rates as well.
Canstar’s data insights director, Sally Tindall, predicts most banks will soon adjust savings rates downward. While Westpac’s transparency regarding upcoming changes may disappoint customers, it sets a standard for other banks to follow in keeping customers informed.
Recent statistics indicate that Australian households hold a record $1.6 trillion in savings accounts, reflecting an increase of $8.3 billion from the previous month and over $125 billion year-on-year. However, many savers are effectively losing money due to diminishing interest rates on savings accounts and term deposits.
Interest rates on online savings accounts currently hover around 1.5%, while term deposit rates average about 3.1%. With inflation sitting at 2.4%, real returns on cash holdings could slip below zero, emphasising the urgency for savers to reassess their options. Despite expectations that inflation will stabilise, it is predicted that consumer prices will rise briefly when cost-of-living support ceases, further impacting the returns on cash investments.
Data from the Reserve Bank shows that average returns on online savings accounts were 1.55% in April, while attractive rates from term deposits have now become harder to find. The continued expectation of further cash rate cuts from the RBA—with markets speculating at least one more by August and two more by February—signals a potential decrease to 3.10%.
Though the cash rate cut may be welcomed by mortgage holders, Tindall warns it is likely to leave savers feeling frustrated. The current landscape indicates that savers may not see positive changes in the near future, with expectations of falling interest rates over the coming weeks. While some rates are still in the 5% range, these may soon become scarce.
In summary, while Westpac has taken the initiative to communicate upcoming rates, other major banks remain silent, leaving many savers in uncertainty and facing the prospect of diminishing returns amidst a challenging economic environment.