Competition in the savings sector heats up as more accounts climb above 5 per cent

A total of five banks now offer at least one ongoing savings rate above 5 per cent, as competition in the savings sector continues to heat up.

Today, Move Bank increased its Growth Saver account to a maximum rate of 5.25 per cent – the equal highest ongoing savings rate in the market for all adults, alongside ING’s Savings Maximiser.

Bank of Queensland offers a higher ongoing savings rate at 5.30 per cent, however, it is reserved for young adults aged between 14 and 35.

RateCity.com.au database shows:

• 8 banks have at least one ongoing savings rate of 5.00% or higher (excludes kids accounts).
• 5 of these banks have ongoing savings rates over 5 per cent.
• 4.50% is the highest big four bank ongoing savings rate for all adults, offered by Westpac, NAB and ANZ. (Note: Westpac has a young adults account at 5.00%).

Current highest ongoing savings rates (excludes kids accounts)

Source: RateCity.com.au

Big four bank savings account rates

Source: RateCity.com.au.

Data out from APRA yesterday shows money in the bank from Australians hit yet another record high in April, with a total of $1.37 trillion in household deposits.

This includes funds in savings accounts, transaction accounts and offset accounts.

APRA Monthly Banking Statistics: deposits from households

Source: APRA monthly banking statistics for April 2023, released 31 May 2023.

RateCity.com.au research director, Sally Tindall, said: “Savers are a hotter commodity than they might think. The banks are on the hunt for cash to help fund their mortgage books now the days of cheap money are a distant memory.”

“The cost of wholesale funding continues to climb at the same time the banks are starting to repay the RBA’s Term Funding Facility COVID loans,” she said.

“As a result, banks are engaged in some healthy rivalry to compete for new business.

“Australians looking for a rate that starts with a ‘5’ now have a handful of options to choose from, but there are plenty of hoops to jump through to qualify for each one.

“Savers with a set-and-forget mentality could find they’re getting stung, as banks purposely leave some interest rates down in the dungeons.

“Many banks have kept complacent savers on interest rates that are under 2 per cent, despite the fact the cash rate is nearing 4 per cent.

“The latest APRA banking statistics show deposits from households are still on the rise, despite a barrage of rate hikes and the steep climb in cost-of-living expenses.

“Australians have squirrelled away an extra $385 billion in deposits since the start of COVID, however, these buffers are by no means spread evenly among households.

“While some people are scrummaging around for every last dollar to pay the bills, others are still adding to their war chests.

“This extra money in the bank is one of the reasons why the RBA has had to hike the cash rate a lot further than most people initially thought,” she said.

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