Commonwealth Bank and Westpac both cut interest rates on key savings accounts last week, in the latest move by banks to protect their margins in response to higher funding costs.
While some banks are raising home loan rates to protect their margins, others are cutting at-call deposit rates.
CBA cut the base rate on its NetBank Saver account by 30 basis points to 50 bps, while Westpac cut its eSaver rate by 30 bps.
According to comparison site Mozo, base rates on three of the big banks’ savings accounts have halved over the past year.
Mozo director Kirsty Lamont says: “These are the default savings accounts customers are signed up to. These cuts are going to be felt by millions of customers.”
The big banks are not the only ones cutting at-call deposit rates. Mozo reports that Auswide cut the rate on its online savings account from 2 per cent to 1.75 per cent last month.
BankVic cut the rate on its savings account from 1.8 per cent to 1.7 per cent.
Regional Australia Bank cut the ongoing bonus rate on its Savings Booster account by 10 bps to 2.55 per cent.
The rate leaders in the at-call deposit market are Rams, Citibank and RaboDirect.
Rams offers an ongoing bonus rate of 3 per cent on its Saver account. To qualify for the bonus rate customers must deposit a minimum of $200 a month, make no withdrawals and keep the balance above $200.
Citibank offers a four-month introductory rate of 3.05 per cent on its Online Saver account. RaboDirect also offers a four-month introductory rate of 3.05 per cent on its High Interest Savings account.