Household deposits continue to soar as Australians squirrel money away

Household deposits hit a new record high of almost $1.42 trillion in September, despite pressure from the rising cost of living and 12 RBA hikes.

APRA’s monthly authorised deposit-taking institution statistics, released today for the month of September, shows money in the bank from households has risen by $11 billion compared to the previous month, and over $99 billion compared to the same time a year ago.

Money in the bank from households has risen every single month since May 2021, with the exception of June 2023.

Note: deposits from households includes money in savings accounts, term deposits, transaction accounts and mortgage offset accounts.

Total deposits by households, September 2023

Source: APRA monthly authorised deposit-taking institution statistics.

The total value of household deposits is still on the rise, however, the growth has slowed from the previous month.

This mirrors comments from Governor Bullock this month who noted Australians were, in aggregate, still saving, albeit at a slower pace, in contrast to the US where households had started to run down their buffers.

Loans to households: owner-occupier + investor housing

The total value of household mortgages from Australia’s largest bank, CBA, dropped for the third consecutive month – something never seen before in APRA’s monthly ADI banking statistics dated back to 2002.

In September, the bank’s mortgage book fell by 0.15 per cent or $793 million from the previous month.

Conversely, growth in ANZ’s home loan book continued to pick up steam, rising by 0.91 per cent from the previous month, or $2.58 billion – well above the total growth for the month of 0.33 per cent.

Westpac and NAB both grew by 0.27 per cent and 0.31 per cent respectively.

ANZ is the only big four bank still offering a cashback, although Westpac’s subsidiaries St George, Bank of Melbourne and BankSA still offer this incentive.

Big four banks: loans to households, housing

Source: APRA. *Authorised deposit-taking institutions.

Note: loans to households: housing is total of both owner-occupier and investor loans as recorded by APRA.

RateCity.com.au research director, Sally Tindall, said: “At almost $1.42 trillion, the household war chest is at an all-time high as Australians stockpile their savings in preparation for tougher times ahead.”

“While it’s fantastic to see so many Australians focused on tipping every spare dollar into their mortgages and savings accounts, these buffers are anything but evenly spread,” she said.

“Households are feeling the heat from the RBA rate rises very differently across the country, with some families filing for hardship, while others are still filling up their savings accounts.

“This record-high buffer comes at a time when calls to the National Debt Helpline are at elevated levels. This articulates just how blunt the RBA’s cash rate lever actually is.”

“While the value of home lending also continued to rise, today’s APRA figures for September recorded another drop to CBA’s residential mortgage book, following declines in August and July.

“The drops come on the back of the bank’s decision to pull its $2,000 cashback incentive for refinancers at the end of May.

“CBA has been walking away from competition in the mortgage market since March of this year, in a combination of new customer variable rate hikes and the scrapping of its cashback, a strategy that hasn’t taken long to impact its mortgage book.

“Many borrowers seeking relief are looking beyond CBA in search of either cut-throat rates or cold hard cash – sometimes both.

“As soon as CBA pulled the pin on its cashback deal, other lenders tucked in behind. The number of lenders now offering cashback incentives has almost halved in the five months since CBA ditched this contentious marketing tactic.

“The RateCity.com.au database shows there are just 15 lenders still offering cashbacks to refinancers, including big four bank ANZ.

“While ANZ’s cashback deal is half of what it was two months ago, at $2,000, that’s likely to be enough to incentivise some borrowers to switch. The bank is also offering a $3,000 cash sweetener to select first home buyers, which may have also helped boost its loan book.

“We expect ANZ’s home loan book will continue to increase at an accelerated pace while the bank has its cashback offers on the table,” she said.

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