The highest savings rates take a tumble despite no RBA hike

Bank of Queensland and ME Bank have both sliced their high interest savings accounts in an out-of-cycle rate cut.

ME Bank yesterday reduced the rate on its HomeME account – the highest ongoing savings rate in the market – by 0.10 percentage points.

The account launched in July at 5.65 per cent, but has now dropped to 5.55 per cent. Despite the cut, this is still the highest ongoing savings rate in the market.

Today, Bank of Queensland (BOQ), the parent company of ME Bank, has cut its highest-rate savings accounts by 0.10 percentage points for new and existing customers.

As a result, the bank’s highest ongoing savings rate, Future Saver, has dropped from 5.50 per cent to 5.40 per cent (this account is for young adults).

BOQ has, however, increased the interest rate on its Simple Saver, which does not have any monthly terms and conditions, by 0.10 percentage points to an ongoing rate of 4.60 per cent.

Changes to ME Bank and BOQ savings accounts

Source: RateCity.com.au

The BOQ Group is following in the footsteps of big four bank ANZ, which cut the ongoing rate on its Online Saver last Friday, also by 0.10 percentage points.

A handful of other banks have also been quietly cutting savings rates, despite no move from the RBA in the last four meetings. The RateCity.com.au database shows over the last two months:

• 15 per cent of banks have cut at least one savings rate, while –
• 3 per cent of banks have hiked at least one savings rate.

Which banks now offer the highest ongoing savings rates?

As a result of these changes, ME Bank is still offering the highest ongoing savings rate in the market at 5.55 per cent, however, ING, MOVE Bank, and Teachers Mutual Bank are now equal second, offering 5.50 per cent.

All of the highest ongoing savings accounts have monthly conditions and a balance limit to qualify for the maximum rate.

Highest ongoing savings rates (excludes kids accounts)

Source: RateCity.com.au

Savings rates with no conditions still a competitive option

BOQ’s 0.10 percentage point increase to its Simple Saver account puts it in the top three for savings accounts with no terms and conditions.

While these accounts do not offer rates as competitive as those with conditions, they are still an attractive option for savers who are looking to maximise their dollars without the hassle of meeting specific terms each month.

Highest ongoing savings rates with no conditions

Source: RateCity.com.au

RateCity.com.au research director, Sally Tindall, said: “ME Bank’s HomeME stormed on to the savings market in July of this year with a leading rate of 5.65 per cent.”

“Just over three months later and the bank has already turned this interest rate down a notch, despite no move to the cash rate,” she said.

“Nevertheless, this account still offers the highest ongoing savings rate in the market at 5.55 per cent, for balances up to $100,000.

Customers of BOQ and ME Bank chasing competitive rates will be puzzled by the news that their interest rate has dropped.

That said, BOQ has bumped up the rate on its Simple Saver which will be a welcome surprise for these customers, and likely to attract others looking for an account with no messy conditions.

“Banks, like borrowers, 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 inject a buffer into their rates in case the RBA does hike.

“Savers should keep an eye on their rate regardless of what the next couple of RBA meetings produce.

“Banks can and do move interest rates both up and down, without the RBA moving an inch,” she said.

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