ANZ has clipped the savings rate by 15 basis points on both its conditional and standard savings products, making it the latest financial institution to bow to the pressures of a low-interest environment fuelled by the COVID-19 recession.
In March, the Reserve Bank of Australia lowered the official cash rate to 0.25 per cent due to economic freefall brought on by the pandemic.
A lower interest rate forces banks to reduce savings rates to minimise paying customers interest, which is an expense to the bank.
The cuts to ANZ’s Online Saver now brings the maximum three-month introductory rate to 0.6 per cent, which then falls to an ongoing rate of 0.05 per cent.
ANZ’s conditional Progress Saver deposit account has fallen to a maximum rate of 0.7 per cent and base rate of 0.01 per cent.
RateCity research director Sally Tindall said the average ongoing savings rate was at 0.51 per cent, with most banks offering base rates just above zero.
“Banks get the most bang for buck by cutting their base rates rather than their bonus rates, however the issue is many base rates are just a fraction above zero, so there’s nothing left to cut,” she said.
“While this low-rate environment is typically great news for homeowners, Australia has more savers than mortgage holders, and these customers are watching their interest rates whittle away.”
More than three-quarters of Australian household deposit accounts are with one of the major four banks, with Westpac offering the highest maximum conditional savings rate at 0.85 per cent.
Westpac is offering millennial customers aged between 18 and 29 a savings rate of 3 per cent for balances up to $30,000.
Digital-only bank Up is offering the highest ongoing rate with no strings attached at 1.6 per cent.
“When it comes to savings rates, ING, Bank of Queensland, ME Bank and MyState are some of the more consistent performers; however, in this market, it really does pay to check on the competitiveness of your rate at least every few months,” Ms Tindall said.