Highest savings rate now trumps the lowest mortgage rate

Virgin Money has today hiked its popular savings account to a maximum of 3.60 percent. This means the highest ongoing savings rate is now above the lowest home loan rate, 3.10 per cent.

Virgin Money has today raised its Boost Saver account by 0.50 percentage points. This is in addition to a 0.50 percentage point hike earlier this month, taking the total increase in August to 1.00 percentage point.

By contrast, the RBA raised the cash rate by 0.50 percentage points this month.

Earlier this week, ANZ also increased its Plus Save account for the second time this month by 0.20 percentage points, taking the total August hike to 0.70 percentage points.

Source: RateCity.com.au. Monthly conditions apply for Virgin Money rate.

Highest savings rate now above the lowest variable mortgage rate

Following today’s rate rise from Virgin Money, the leading savings rate is now higher than the lowest variable mortgage rate of 3.10 per cent from loans.com.au. This excludes lenders which have not announced their August RBA changes.

RateCity.com.au database analysis:

• 3.60% is the highest ongoing savings rate from Virgin Money.
• 3.10% is the lowest variable mortgage rate from loans.com.au (excludes lenders which have not announced August RBA changes).
• 7 bankshave raised at least one savings account rate beyond the 1.75% of RBA hikes since May, including Virgin Money, ANZ, Bank of Queensland and Suncorp.

Since the RBA began hiking the cash rate in May, the gap between the highest ongoing savings rate for all adults and the lowest variable mortgage rate has been closing. Today, the highest saving rate has surpassed this mark.

RateCity.com.au research director, Sally Tindall, said: “The balance of power is starting to shift in favour of savers.”

“For years, banks have kept savers out in the cold, with paltry rates and next-to-no competition. However, with the cost of wholesale funding now on the rise, an increasing number of banks are starting to see savers as a sought-after commodity. This is despite the fact household deposits are still at a record high,” she said.

“People looking to switch to this new market-leading savings rate from Virgin should be warned – the account comes with plenty of terms and conditions to qualify for the maximum rate.

“To secure 3.60 per cent each month, customers must commit to locking up their savings for 32 days and make 5 purchases and deposit $2,000 a month into their Virgin transaction account.

“Nevertheless, many keen savers will be happy to jump through these hoops if it means getting a savings rate that’s almost double the current cash rate.

“Savers looking for a less complicated account still have plenty of choice. ANZ’s new Plus Save account is now offering 2.70 per cent with absolutely no strings attached, while Macquarie has a transaction account paying 2.25 per cent interest,” she said.

Bonus savers – market leaders for all adults

Source: RateCity.com.au. Conditions for max interest rate apply.

Bonus savers – market leaders for young adults

Source: RateCity.com.au. Conditions for max interest rate apply.

Highest savings rates for accounts with no monthly conditions

Source: RateCity.com.au

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