Australia's biggest bank has so far failed to pass on the latest official interest rate hike to its everyday savers.  On savings accounts, Commonwealth Bank was the only bank yet to act on Thursday afternoon (pictured is a Sydney branch)

Cash payments for Australians with money in the bank

Commonwealth Bank has so far failed to pass on the latest official interest rate hike to ordinary savers, unlike Westpac, NAB and ANZ.

The CBA was the first major lender last week to announce that it had fully passed on the Reserve Bank of Australia’s 0.25 percentage point hike to its floating rate borrowers.

Within a year, typical borrowers with a $600,000 mortgage could be paying more than $700 more per month on their mortgage payments, with two major banks now expecting another seven interest rate hikes by May 2023.

But on savings accounts, the CBA was the only major bank yet to act on Monday morning, nearly a week after the RBA’s cash rate hike.

CBA’s GoalSaver and NetBank Saver accounts always have a savings rate of 0.25%.

At this low rate, a deposit of $1,000 without additional top-ups would only be worth $1,002.50 after one year.

The other big banks – Westpac, NAB and ANZ – all raised their bonus savings rates by a quarter of a percentage point to levels ranging from 0.4% to 0.5%.

This would see the same deposit worth between $1,004 and $1,005 after a year with no additional savings.

RateCity research director Sally Tindall said Commonwealth Bank customers had every right to feel upset.

“This is an extremely disappointing decision on the part of the ABC,” she said.

Australia’s biggest bank has so far failed to pass on the latest official interest rate hike to its everyday savers. On savings accounts, Commonwealth Bank was the only bank yet to act on Thursday afternoon (pictured is a Sydney branch)

Three of the big four banks raise savings rates by 0.25 percentage points

COMMONWEALTH: No increase to 0.25% GoalSaver; NetBank Saver still at 0.25%

WESTPAC: A 0.25 percentage point increase in health from May 17, bringing it to 0.5%

NAB: A 0.25 percentage point increase in Reward Saver starting May 13, bringing it to 0.5%

ANZ: A 0.25 percentage point increase in Progress Saver starting May 13, bringing it to 0.4%

Source: RateCity

“Australia’s biggest bank’s savings customers have a right to feel ripped off.

“The bank offered nothing to children and nothing to regular savers.”

National Australia Bank chief executive Ross McEwan declined to comment to the ABC, but noted that savers had been missing out for more than a decade.

“Over the past 11 years, savers have been affected by falling interest rates, so we felt it was very important that we take care of them,” he told reporters on Thursday. .

Effective May 13, NAB’s Reward Saver rate increases to a maximum rate of 0.5%.

Westpac’s Life product will have a savings rate of 0.5% from May 17.

ANZ’s Progress Saver account will have a rate of 0.4% by May 13.

But Commonwealth Bank’s GoalSaver remains at 0.25% – the lowest of the major banks.

The ABC is instead offering an 18-month term deposit rate of 2.25% for savers with balances between $5,000 and $2 million, starting May 13.

For a deposit of $5,000, this will mean interest after one year of $112.50.

This rate is still lower than the one-year term deposit rates offered by smaller players.

Judo Bank offers 2.7%, Macquarie Bank has a rate of 2.5% while AMP has a rate of 2.45%.

RateCity research director Sally Tindall (pictured) said ABC customers had every right to feel upset

RateCity research director Sally Tindall (pictured) said ABC customers had every right to feel upset

Best Term Deposit Rates

ONE YEAR: Judo Bank (2.7 percent); Macquarie Bank (2.5%); CHA (2.45%)

TWO YEARS: Judo Bank (3.5 percent); Macquarie Bank (3.3%); CHA (3.25%)

These banks offer even better rates for two-year term deposits.

Judo pays 3.5% at maturity, Macquarie Bank offers 3.3% while AMP Bank pays 3.25%.

A savings rate of 3.5% on $5,000 would earn interest of $175.

The big four banks have now all adjusted their 2023 interest rate forecasts after the RBA raised the cash rate on Tuesday for the first time since November 2010.

The Reserve Bank’s 0.25 percentage point increase was above market expectations of a 0.15 percentage point hike, taking the cash rate to 0.35% – the highest since March 2020 at the start of the pandemic.

This followed March quarter inflation data showing an annual increase of 5.1% – the fastest pace since mid-2001 after the introduction of the GST.

Westpac and ANZ now expect the cash rate to hit 2.25% by May 2023 for the first time since May 2015.

That would mean seven interest rate hikes and see monthly repayments on a typical $600,000 mortgage jump $713 from $2,306 to $3,019, with variable rates rising from 2.29% to 4.44. %.

The big four banks have now all adjusted their 2023 interest rate forecasts after the RBA raised the cash rate on Tuesday for the first time since November 2010 (pictured is a Paddington auction in Sydney)

The big four banks have now all adjusted their 2023 interest rate forecasts after the RBA raised the cash rate on Tuesday for the first time since November 2010 (pictured is a Paddington auction in Sydney)

How YOUR mortgage payments could jump under a 2.25% cash rate

$500,000: Monthly repayments up $594 from $1,922 to $2,516

$600,000: Monthly repayments up $713 from $2,306 to $3,019

$700,000: Monthly repayments up $831 from $2,691 to $3,522

$800,000: Monthly repayments up $951 from $3,075 to $4,026

$900,000: Monthly repayments up $1,070 from $3,459 to $4,529

$1,000,000: Monthly repayments up $1,189 from $3,843 to $5,032

Calculations based on variable mortgage rates rising from 2.29% to 4.44%, alongside the cash rate increasing by 2.15 percentage points from a record low of 0.1% to 2.25%.

NAB expects the cash rate to reach 2.6% by August 2024, which would be the highest since August 2013.

A typical borrower in this scenario will see their monthly repayments jump from $839 to $3,145 as variable rates climb to 4.79%.

Ms Tindall said the RBA rate hike in May was far from the last.

“May’s cash rate hike is just a taste of what’s to come from the RBA,” she said.

“Whether you have a variable rate or a fixed loan coming due, be prepared to pay a lot more.”

The central bank has not raised the cash rate seven times in a year since 2009 and 2010 after the global financial crisis.

Big four banks adjust RBA rate hike forecast

WESTPAC: Cash rate of 2.25% by May 2023

NAB: Cash rate of 2.6% by August 2024

ANZ: 2.25% by May 2023

COMMONWEALTH BANK: 1.6% by February 2023

Source: RateCity

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