Millions of Australians are facing a blow to their savings as banks lower interest rates following the Reserve Bank of Australia’s (RBA) decision to cut the cash rate to 3.60%. The change, which is set to bring relief to homeowners, will significantly affect savers with lower returns on their deposits.
Following the RBA’s move to reduce the official cash rate from 3.85% to 3.60%, several major banks, including NAB, Macquarie, and the Bank of Queensland (BOQ), have dropped interest rates on their savings accounts. While homeowners stand to benefit from lower mortgage repayments, savers are feeling the sting of reduced returns on their deposits. This trend has sparked concern, particularly for younger Australians and those relying on interest as a key part of their income.
Major Banks Cut Savings Rates
The impact of the RBA‘s decision has been swift, with several banks adjusting their interest rates for savings accounts. According to Finder’s head of consumer research, Graham Cooke, the cuts are a direct result of the cash rate reduction, which has already led to reductions in savings rates across the board.
For instance, BOQ’s Future Saver account, aimed at customers aged 14 to 35, has dropped from 5.10% to 4.85%. Similarly, NAB’s Reward Saver and iSaver accounts saw a 0.25% reduction. Macquarie Bank also cut rates by 0.25% on both its transaction and savings accounts.
These changes are part of a broader trend following the RBA’s decision to lower the cash rate for the third time this year. While the move is expected to ease financial pressure on mortgage holders, it raises concerns for savers who now face reduced interest rates on their hard-earned deposits. Experts have warned that more cuts may follow as the broader banking sector adjusts to the new cash rate.
Homeowners Benefit, But Savers Lose Out
For homeowners with variable-rate mortgages, the RBA’s decision brings welcome relief in the form of lower mortgage repayments. Analysts predict that many homeowners could see a reduction of around 1% on their mortgage rates by the end of the year, leading to significant savings.
However, this reprieve does not extend to renters or savers. As Cooke points out, tenants will not benefit from the falling interest rates, and landlords may not pass on any savings to their tenants despite lower mortgage repayments.
The effects of these changes are being felt most acutely by savers who depend on interest income. While some banks, including Westpac, are yet to announce rate changes, experts predict that savings rates may continue to fall, with more cuts expected from banks such as Commonwealth Bank and ANZ. According to Canstar’s Sally Tindall, savers should be proactive in checking their accounts, as many banks are reducing rates without making public announcements.
