Highest savings rate takes a tumble

ME Bank has today sliced the bonus rate on its highest interest savings account from 5.55 per cent to 5.25 per cent, in an out-of-cycle rate cut. 

ME Bank reduced the bonus rate on its HomeME account – the highest ongoing savings rate in the market, until today – by 0.30 percentage points.

The account launched in July last year at 5.65 per cent, but has since dropped by 0.40 percentage points.

ME Bank HomeME changes effective today – balances up to $100K

Source: RateCity.com.au

ME Bank is following in the footsteps of two of the major banks, Westpac and ANZ, which made changes to their savings rates in the last six weeks. 

At the time, Westpac dropped the base rates on its Life savings accounts by 0.15 percentage points, and lifted the bonus rates by the same amount, while ANZ cut the base rate on its digital offering ANZ Plus Save by 0.10 percentage points and hiked the bonus rate by the same amount. 

A handful of other banks have also been quietly adjusting savings rates, despite no move from the RBA. The RateCity.com.au database shows, since 1 January 2024:

• 30 banks have cut at least one savings rate, while

• 35 banks have hiked at least one savings rate. 

Which banks now offer the highest ongoing savings rates? 

As a result of these changes, the new highest ongoing savings rate for all adults is now 5.50 per cent on offer from three banks – ING, ubank and MOVE Bank. All of these highest ongoing savings accounts have monthly conditions and a balance limit to qualify for the maximum rate.

That said, The Mutual Bank offers a higher rate of 6 per cent on its savings account with no strings attached. However, this rate is only available for balances of between $50,000 and $100,000.

Highest ongoing savings rates

Excludes kids and young adult accounts

Source: RateCity.com.au.

Highest ongoing savings rates (no strings attached)

Excludes introductory rates, kids and young adult specific accounts

Source: RateCity.com.au. The Mutual Bank rate is available until 31 January 2025, the Macquarie Savings rate includes an intro rate of 5.50% on balances up to $250K for first 4 mths.

Money in the bank hit another record high in the latest APRA data for September 2024, with the total amount saved in the bank from households now at $1.52 trillion.

Note: deposits from households include term deposits, transaction accounts, mortgage offset accounts and savings accounts on the books of authorised deposit-taking institutions (ADIs).

Total deposits by households, September 2024

Source: APRA monthly authorised deposit-taking institution statistics released 31 October 2024. Note start of hikes is 30 April 2022.

RateCity.com.au money editor, Laine Gordon, said: “It’s disappointing to see the highest ongoing savings rate get the chop, despite no move from the RBA.”

“Banks have been quietly chipping away at their savings rates this year, slowly edging down, and it could be a sign of what is still to come,” she said.

“The problem for banks is they are bursting at the seams with cash. Latest APRA data shows Australians have a record $1.52 trillion in the bank in September. A lot of banks will be weighing up how much new business they want to get through the door only to have to fork out interest on that.

“Banks, like savers, are waiting with bated breath to see what the RBA’s next steps will be. The small cuts we’re seeing in the savings space could be a way for the banks to protect their profit margins. 

“That said, there are still more than 20 banks on the RateCity.com.au database with a savings account paying 5 per cent or higher. 

“Savers should keep an eye on their rate regardless of what the next six months’ of RBA meetings produce. Banks can and do move interest rates both up and down, without the RBA moving a muscle,” she said. 

Compare savings accounts