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ISCOVER
Staff Reporter
The Global Financial Crisis has made it harder for borrowers and easier for savers, a new report has found.
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According to recent research by RateCity, financial institutions have started to move their lending and deposit rates independently of the Reserve Bank cash rate since the inception of the GFC.
This move has been good for savers but has brought uncertainty and higher costs for borrowers.
The average standard variable rate moved from almost 2 per cent above the cash rate to over 3 percentage points. While RateCity’s top online savings account rates rose from about 0.5 percent above the cash rate to about 1.5 percentage points above.
RateCity spokesperson Michelle Hutchison said while the top savings accounts have grown more competitive, variable rate borrowers have experienced a turbulent five years of interest rate movements.
“Financial institutions have been pushing harder for deposits by keeping their maximum rates relatively high compared to the cash rate. Savers can take advantage of this by shopping around for savings accounts and switching deals when promotional rates expire and the bonus rates drop,” she said.
“Variable home loan borrowers however, faced dramatic changes in interest rates during the past five years, with 385 basis points between the lowest and highest average standard variable rates over that time. What that means is households with a $300,000 mortgage were paying almost $800 more per month in repayments compared to the lowest rates."
