In a move that has many Australians smiling, Westpac has become the first major bank to pass on the RBA’s recent interest rate hike in full. Starting February 13, savers will see their savings account rates jump, with some customers benefiting from rates as high as 5.25%. Here’s why this move could be a game-changer for people looking to grow their savings in a challenging financial climate.
Westpac Takes the Lead
It’s not often that a big bank moves first when it comes to passing on interest rate changes, but Westpac is breaking the mold. After the RBA’s 25 basis point rate hike, the bank announced that its Westpac Life savings accounts would see a 0.25% increase, bringing the maximum ongoing rate to 4.50%. However, for younger customers aged 18 to 34, the rate is even higher, reaching 5.25% — but there’s a catch. To access this higher rate, customers will need to meet minimum monthly requirements. If they don’t, the rate drops to a mere 0.10%, which is a stark contrast.
Sally Tindall from Canstar praised Westpac for leading the way, particularly for young adults. According to Tindall, this is a big win for people aged 18 to 34, but she also reminded savers that they need to read the fine print to fully benefit, reports Yahoo Finance.
Other Banks Jump on the Bandwagon
Westpac may have been the first, but they weren’t alone for long. Macquarie Bank quickly followed, announcing that its savings customers will get an ongoing 4.50% variable rate on balances up to $2 million, starting February 20. Not to be left behind, ING is offering 5% on its Savings Maximiser accounts, provided customers meet the necessary conditions starting February 10. Other banks like Up Bank and UBank also increased their rates, with Up Bank offering 4.85% starting February 11 and UBank offering 4.60% from February 10.
It’s clear that there’s a growing trend among banks to reward savers with better returns, even as they raise rates for borrowers.
The Bigger Picture: Rising Rates for Borrowers Too
While savers are celebrating, borrowers might not feel as excited. With the RBA’s 25 basis point hike, mortgage rates are going up too. Commonwealth Bank, ANZ, NAB, and Macquarie all quickly followed Westpac’s lead and announced similar increases to their home loan rates, affecting millions of Australians with mortgages. This latest move by the RBA is part of a broader strategy to curb inflation, which has been running higher than desired.
The hope is that by raising the cost of borrowing, the central bank can slow down spending, reduce inflation, and stabilize the economy. But for homebuyers and people with large mortgages, this means higher monthly repayments.
What Does This Mean for Australians?
For savers, it’s a rare bright spot in what’s been a challenging economic landscape. While it’s not easy to save in times of high inflation, these new higher rates from Westpac and other banks could help ease the sting. However, for anyone with a mortgage, the rising interest rates could become a serious burden. With more rate hikes expected, Australians will need to adjust their financial strategies, whether that means shopping around for the best savings rates or preparing for higher home loan repayments.
It’s clear that 2026 is going to be a year of financial adjustments for many. The good news for savers is that with a little planning and attention, these new rates could help them make the most of their hard-earned money. But for anyone with a mortgage, the increased rates might just make the dream of homeownership feel even further out of reach. Time will tell whether these adjustments will lead to a more balanced economy or continue to create challenges for everyday Australians.
