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Pressure from Australia’s low interest rate environment has dealt another blow to savers with two major banks taking a knife to rates across deposit accounts.
ANZ on Friday slashed savings rates by 10 basis points on both its standard and conditional savings accounts, while Commonwealth Bank has chipped five basis points off its conditional products.
It follows similar moves in recent weeks by other major banks, including CBA, that have passed on out-of-cycle rate cuts onto customers.
ANZ’s standard Online Saver now attracts a three-month introductory rate of 0.35 per cent before reverting to an ongoing rate of 0.05 per cent.
The bank’s conditional Progress Saver is now advertising a maximum rate of 0.4 per cent if a deposit of more than $10 is made every month and the balance increases.
CBA’s conditional GoalSaver now has a maximum rate of 0.4 per cent, and its kids Youthsaver is garnering a savings rate of 0.65 per cent for balances up to $50,000.
According to RateCity, the average savings rate across the banking sector is 0.37 per cent.
“It’s a grim outlook for Australian savers, many of whom are now earning well under the average rate of 0.37 per cent with no prospect of a rate rise until 2024,” RateCity research director Sally Tindall said.
“The banks are getting hammered with burgeoning deposit books, making it increasingly difficult to pay a decent rate to savers.”
The Reserve Bank of Australia has claimed it will not increase the cash rate for the next few years while inflation remains below the target range of 2 to 3 per cent.
Since the start of the coronavirus pandemic, the RBA has lowered the official cash rate three times to a position of 0.1 per cent.
A lower cash rate reduces the cost of borrowing for banks, which means cheaper loans to businesses and households.
However, a lower interest rate makes it more expensive for banks to retain savings rates at higher levels.
Canstar executive Steve Mickenbecker said major banks had cut close to 1.26 per cent from savings accounts since January last year.
“The low interest rate environment has dealt a major blow to savers, with the average annual interest earnings on bonus savings accounts now $400 less annually than what it was 10 years ago. For some people this could be the cost of their car insurance renewal each year,” Mr Mickenbecker said.
“As savings rates creep ever closer to zero, more savers must surely be changing their savings habits, whether it be by chasing the higher rates that are available or by building a mix of other investments into their portfolio or both.”
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