Bank rhetoric and reality on deposit interest rates may be in sync, for now, with around 800 changes to bank deposit products monitored by Infochoice confirming a gentle, pro-saver theme to the flurry of repricings in the wake of the Reserve Bank’s 50 basis points reset in the official cash rate since early June.
The lowering in interest rates on everyday savings accounts congregates around the 20 bps to 25 bps range, at least on the maximum rate on products that often feature tiered pricing.
In many cases base rates on savings account already hover around zero.
The few banks with outlier base rates on select products have been afforded the opportunity to lower these in the order of 50 bps, and this group – including Westpac, AMP, BankVic and Horizon Credit Union – have done so.
In a measure of the tension in pricing committees the Westpac Life savings account, once a showy, heavily promoted product line for the bank, has had its base rate almost halved to 0.80 per cent.
Term deposits are inevitably a mixed bag. For TD’s with a minimum deposit of $5,000 and a 5-year term, Infochoice shared around 125 rate movements with Banking Day.
The median TD rate cut was 40 bps, though around 20 TD offers have had rates hacked by 70 bps or more since the beginning of June.
TD rate reductions at the low end of the scale – 10 to 15 bps – tend to for term deposits from larger and regional banks, and won’t last.
For a 5-year deposit, Bank First top the rankings with 2.45 per cent on offer, though the banana farmers bank bcu rates 10 bps better, but only for a Farm Management Deposit.
On 3-year TDs Qudos Bank and Bank First once again top the rankings, at 2.40 per cent, Infochoice found.
So the spread to the yield on government bonds (around 1.00 per cent – same as the overnight rate) is a whopping 140 bps at the 5-year end of the term deposit spectrum.
Deposit rate cuts these last few days by banks may have been restrained for a mix of political and commercial reasons, and rougher treatment for savers must be the next phase, and soon.