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ISCOVER
Staff Reporter
Australia’s savers are being given preferential treatment over borrowers by Australia’s major banks, new research has revealed.
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According to new data by RateCity, Australia’s major four banks have been more generous with their three-month term deposits compared to their standard variable mortgage rates.
RateCity found that the major four banks had passed on around 80 per cent of the cash rate reduction to variable rate home loan customers since November. However, term deposit rates have only come down by around 20 basis points on average across the major banks – which is around 40 per cent of the cash rate reduction.
RateCity’s chief executive Damian Smith said savers are being rewarded with high term deposit rates as banks face funding pressures from offshore lending.
“The major banks continue to look for term deposits as they try to shore up funding sources and attract a more cautious investor. Term deposits are safe, secure investments and savers are the winners with high returns on their savings if they compare the market.”
The news follows widespread speculation that the Reserve Bank will drop the official cash rate at its next board meeting on May 1, which will likely see at-call savings account rates follow with rate reductions, according to Mr Smith.
“If the Reserve Bank drops the official cash rate next week, it’s likely that base rates for at-call savings accounts will follow, although there will still likely be very competitive “bonus offers” for new customers and for significant monthly net additions to your account.
“We suspect term deposits will continue to be favoured by the banks – while rates may come down slightly, savers in these products are likely to hang onto higher rates, with some of the pain being borne by variable rate home loan customers.”
