The Commonwealth Bank has so far failed to pass on the latest official interest rate rise to everyday savers, but Westpac, NAB and ANZ have.
CBA was the first major lender last week to announce it had passed on in full the Reserve Bank of Australia’s 0.25 percentage point rate increase to its variable rate home loan borrowers.
Within a year, typical borrowers with a $600,000 mortgage could be paying more than $700 extra a month on their mortgage repayments with two big banks now expecting seven more interest rate increases by May 2023.
But when it came to savings accounts, CBA was the only major bank yet to act on Monday morning, almost a week after the RBA increase, ending the era of a record-low 0.1 per cent cash rate.
CBA’s GoalSaver and NetBank Saver accounts still have a 0.25 per cent savings rate, even though the Reserve Bank raised its cash rate by a quarter of a percentage point on May 3.
The online NetBank Saver is expected to be increased by a quarter of a percentage point to 0.5 per cent.
‘Consistent with our past practice, we will be updating our customers in the coming days with the changes to our deposit rates which will, for example, include a 0.25 per cent increase to our popular Netbank Saver account,’ a spokeswoman told Daily Mail Australia.
But the GoalSaver is staying at 0.25 per cent for the time being.
At that low rate, a $1,000 deposit without extra top-ups would be worth just $1,002.50 after a year.
The other big banks – Westpac, NAB and ANZ – have all increased their bonus savings rates by a quarter of a percentage point to levels ranging from 0.4 per cent to 0.5 per cent.
That would see the same deposit be worth $1,004 to $1,005 after a year without further savings being put in.
RateCity research director Sally Tindall said Commonwealth Bank customers had every right to feel upset.
‘This is a hugely disappointing decision from CBA,’ she said.
Australia’s biggest bank has so far failed to pass on the latest official interest rate rise on to its everyday savers. When it came to savings accounts, the Commonwealth Bank was the only bank yet to act as of Thursday afternoon (pictured is a Sydney branch)
Three of the Big Four banks increase savings rates by 0.25 percentage points
COMMONWEALTH: No increase to 0.25 per cent GoalSaver; NetBank Saver still at 0.25 per cent
WESTPAC: A 0.25 percentage point increase to Life from May 17 taking it to 0.5 per cent
NAB: A 0.25 percentage point increase to Reward Saver from May 13 taking it to 0.5 per cent
ANZ: A 0.25 percentage point increase to Progress Saver from May 13 taking it to 0.4 per cent
‘Savings customers with Australia’s biggest bank have a right to feel ripped off.
‘The bank has offered up nothing for kids, and nothing for regular savers.’
National Australia Bank chief executive Ross McEwan declined to comment on CBA but noted savers had missed out for more than a decade.
‘For the last 11 years savers have been hurt with interest rates coming down, so we thought it was very important that we look after them,’ he told reporters on Thursday.
From May 13, NAB’s Reward Saver rate rises to a maximum rate of 0.5 per cent.
Westpac’s Life product will have a 0.5 per cent savings rate from May 17.
ANZ’s Progress Saver account will have a 0.4 per cent rate by May 13.
But the Commonwealth Bank’s GoalSaver stays at 0.25 per cent – the lowest of the major banks.
CBA is instead offering an 18-month term deposit rate of 2.25 per cent for savers with balances of between $5,000 to $2million, from May 13.
For a $5,000 deposit, that will mean interest after a year of $112.50.
This is still lower than the one-year term deposit rates offered by smaller players.
Judo Bank is offering 2.7 per cent, Macquarie Bank has a 2.5 per cent rate while AMP has a 2.45 per cent rate.
RateCity research director Sally Tindall (pictured) said CBA customers had every right to feel upset
Best term deposit rates
ONE YEAR: Judo Bank (2.7 per cent); Macquarie Bank (2.5 per cent); AMP (2.45 per cent)
TWO YEARS: Judo Bank (3.5 per cent); Macquarie Bank (3.3 per cent); AMP (3.25 per cent)
These banks offer even better rates for two-year term deposits.
Judo pays out 3.5 per cent at maturity, Macquarie Bank offers 3.3 per cent while AMP Bank pays 3.25 per cent.
A 3.5 per cent savings rate on $5,000 would yield interest of $175.
The Big Four banks have now all adjusted their interest rate forecasts for 2023 after the RBA on Tuesday raised the cash rate for the first time since November 2010.
The Reserve Bank’s 0.25 percentage point increase was bigger than market expectations of a 0.15 percentage point rise, taking the cash rate to 0.35 per cent – the highest since March 2020 at the start of the pandemic.
This was in response to March quarter inflation data showing an annual increase of 5.1 per cent – the steepest pace since mid-2001 after the GST was introduced.
Westpac and ANZ are now both expecting the cash rate to hit 2.25 per cent by May 2023 for the first since time May 2015.
This will mean seven interest rate rises and would see monthly repayments on a typical $600,000 mortgage climb by $713 from $2,306 to $3,019, as variable rates climb from 2.29 per cent to 4.44 per cent.
The Big Four banks have now all adjusted their interest rate forecasts for 2023 after the RBA on Tuesday raised the cash rate for the first time since November 2010 (pictured is a Paddington auction in Sydney)
How YOUR mortgage repayments could surge under a 2.25 per cent cash rate
$500,000: Monthly repayments rising by $594 from $1,922 to $2,516
$600,000: Monthly repayments rising by $713 from $2,306 to $3,019
$700,000: Monthly repayments rising by $831 from $2,691 to $3,522
$800,000: Monthly repayments rising by $951 from $3,075 to $4,026
$900,000: Monthly repayments rising by $1,070 from $3,459 to $4,529
$1,000,000: Monthly repayments rising by $1,189 from $3,843 to $5,032
Calculations based on variable mortgage rates rising from 2.29 to 4.44 per cent in line with the cash rate increasing by 2.15 percentage points from a record-low of 0.1 per cent to 2.25 per cent
NAB is expecting the cash rate to hit 2.6 per cent by August 2024, which would be the highest since August 2013.
A typical borrower under this scenario will see their monthly repayments soar by $839 to $3,145 as variable rates climb to 4.79 per cent.
Ms Tindall said the May RBA rate rise was far from the last.
‘The May cash rate hike is just a taste of what’s to come from the RBA,’ she said.
‘Whether you’re on a variable rate or a fixed loan that’s due to end, get ready to be paying a lot more.’
The central bank hasn’t raised the cash rate seven times in a year since 2009 and 2010 after the Global Financial Crisis.
The Big Four banks adjust RBA rate rise forecasts
WESTPAC: 2.25 per cent cash rate by May 2023
NAB: 2.6 per cent cash rate by August 2024
ANZ: 2.25 per cent by May 2023
COMMONWEALTH BANK: 1.6 per cent by February 2023