Banks fail to pass on interest rate rises to savers - InterestRate.co.uk
Banks fail

Banks fail to pass on interest rate rises to savers

Earlier this week, the Reserve Bank of Australia (RBA) shocked many economists and home loan borrowers around the country by hiking the interest rate by 50 basis points. This was significantly higher than experts had expected, with many predicting increases of between 25 and 40 basis points. However, the RBA deemed the higher increase necessary to try and control soaring inflation.

While borrowers may have been concerned over the hefty rate hike, it should have come as good news to savers who have failed to make much by way of returns on their savings over recent years. However, it has now emerged that major banks have acted sneakily by failing to pass on the rate hike to savers despite quickly passing it on to borrowers.

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passed to borrowers

Full hike passed to borrowers in a matter of days

Some of Australia’s major banks passed the rate hike on to borrowers within hours of the RBA announcement. But, perhaps unsurprisingly, they have failed to do the same thing when it comes to upping the rates that savers are getting.

One banking giant, Commonwealth Bank (CBA), has stated it will pass on the full interest rate increase to those with GoalSaver and Youthsaver accounts from June 17th, even though it passed the rate increase on to borrowers the day after the RBA announcement.

The other major banks have not indicated when – or if – they plan to increase interest rates for savers. This includes Westpac, which passed on the rate hike to borrowers within hours of the RBA announcement. The other two banks that have yet to announce when savers will receive interest rate increases are ANZ and National Australia Bank (NAB).

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Smaller banks lead the way with rate hike announcements

lead the way

Some smaller banks have now announced increases on their savings accounts, including Macquarie and ING. Interest rates on Macquarie’s transaction account will rise from 0.20% to a comparatively impressive 1.50% from June 17th. The new rate will apply to accounts with balances of up to $250,000.

The Savings Maximiser account from ING will see savings interest rates increase by 0.75%, rising to 2.10%. This interest rate will take effect on June 15th on accounts with balances of up to $100.000. While the rate hike exceeds the rise from the central bank, it is worth noting that ING did not pass on the previous hike to savers in May.

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One industry official, Sally Tindall from RateCity.com.au, commended the smaller banks for boosting competition in the savings sector. She said, “Finally, we have some proof that competition in the savings sector isn’t dead and buried.”

She added, “ING and Macquarie have reset the battlefield for savings rates in what is ultimately a win for savers. CBA, Macquarie and ING have now all made significant increases on some of their most popular accounts. This will put pressure on other banks, in particular, Westpac, NAB and ANZ, to pass on this RBA hike to their savings customers.”

 

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