RBA rate hike: Why savers shouldn’t hold their breath hoping for a boost

Savers hoping to be rewarded with higher interest rates after RBA’s expected cash rate hike today may be disappointed.

If the RBA raises rates by 0.40 percentage points, as some economists predict, it’s unlikely many banks will pass the full hike onto their savings customers.

Analysis from RateCity.com.au shows only 58 per cent of banks hiked at least one savings rate following the May 0.25 percentage point RBA hike.

In many of those cases, banks only hiked interest rates on selected savings accounts, not across the board.

RateCity.com.au database changes to savings accounts since the May cash rate hike:

• 58% of banks have hiked at least one savings rate since the May RBA hike.
• 3.00% is currently the highest rate for young adults from BOQ.
• 1.60% is currently the highest ongoing savings rate for all adults from Virgin Money.
• 0.41% is currently the average big four bank ongoing savings rate.

What the big four banks did after the May RBA hike for existing customers

All big four banks hiked at least one savings rate, however, millions of existing customers missed out entirely.

Source: RateCity.com.au. Note Westpac and NAB increased the intro-rate on their online savers for new customers only.

RateCity.com.au research director, Sally Tindall, said: “Savers hoping to get a big boost with the RBA hike shouldn’t hold their breath.”

“Following the May RBA hike, the banks were quick to hike their home loan rates, yet two out five banks didn’t touch their savings rates,” she said.

“For the banks that did increase savings rates, in many cases only select accounts were hiked, while others stayed dismally low.”

The latest APRA statistics for April show Australian households have a total of $1.27 trillion in the bank – an increase of $281 billion since COVID.

“Many banks remain unwilling to substantially hike their savings rates until Australians start burning through some of the record amount of cash they’ve got stashed away,” she said.

“As a result, serious savers may need to shop around and be willing to jump through a few hoops to qualify for higher interest rates.

“While the average big four bank ongoing savings rate is 0.41 per cent, the highest rate for all adults is 1.6 per cent from Virgin Money while young adults can get up to 3 per cent from BOQ.

“Savings customers who aren’t happy with their bank’s response to the cash rate hikes can always vote with their feet and take their business elsewhere,” she said.

Household deposits in banks: APRA

Source: RateCity.com.au. Deposits data released by APRA, 31 May 2022.

Current big four bank bonus saver accounts

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

Current big four bank online saver accounts

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

Source: RateCity.com.au. Monthly conditions apply for max rate.

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