Big four bank delivers major savings blow
Australian savers have been dealt a huge blow, with a second major bank confirming they are slashing interest rates.
NAB has become the second major bank to move on savings rates, after announcing both its Reward Saver and iSaver accounts have fallen by 25 basis points, with savers now getting 4.4 and 4.65 per cent respectively.
Canstar data insights director Sally Tindall said NAB's move was just the tip of the iceberg for Australians with a savings account.
'This is just the start of what will be an onslaught of rate cuts for savers,' she said.
'It's disappointing to see some banks chop savings rates ahead of their mortgage rates.
'One day, it would be fantastic to see a bank reverse this order to benefit its mortgage and savings customers, rather than themselves.' Savings rates are set to fall in line with the RBA slashing the official cash rate. NewsWire / Nicholas Eagar Credit: NewsWire
NAB is not alone in moving on savings rates with Westpac becoming the first of the big four to slash interest payments to savers.
Westpac announced on Tuesday they were moving on their savings rates in line with changes to their variable mortgages.
A handful of non major banks have also announced chances to their savings rate including challenger bank Macquarie.
The big four bank's quarter of a per cent follows the Reserve Bank of Australia moving on the cash rate, reducing it from 4.10 to 3.85 per cent in a widely predicted move.
This was the second rate cut in the cycle, following a 25 basis point reduction in the official cash rate in February and a hold in May.
Markets are currently predicting at least three more rate cuts between now and February 2026, with NAB previously forecasting there could be as many as five interest rate cuts by early 2026. NAB has become the second major bank to slash interest rates. NewsWire / Gaye Gerard Credit: News Corp Australia
National Australia Bank boss Andrew Irvine previously said a combination of a stable government and falling interest rates will help guide the Australian economy with the cash rate to drop to 2.6 per cent by early 2026.
'There's no doubt these are challenging times, there's all sorts of geopolitical uncertainties that we have to manage,' he said.
'That being said, Australia is in good shape. We enter this period of instability in a strong position.
'We have unemployment that's very low, I believe we will see three or four base-rate reductions that will stimulate the domestic economy.'
While this is welcomed news for struggling mortgage holders, it comes at the cost of savers, who will be rewarded less as the major banks look to match their borrowing and funding costs.
Ms Tindall said the 'glory days' of rates starting with a five is dwindling. Consumers may soon struggle to find savings rates starting with a five. NewsWire / John Appleyard Credit: News Corp Australia
'Macquarie Bank's new ongoing rate of 4.50 per cent, with no monthly terms and conditions to trip customers up, is likely to be one of the highest rates in this particular category once all the banks have declared their post-May RBA rates,' she said.
'If your savings rate has already changed, it could be worth holding steady for the next couple of weeks until the rest of the market has made their changes before you weigh up your options so that you're comparing apples with apples.'
On the other hand a number of mortgage holders will soon benefit from lower interest rates.
Within 24 hours of the RBA announcing a rate cut, 30 lenders said they were passing on the full rate cut.
This included all four major banks that within 30 minutes of the announcement informed customers that the rate cut would be passed on.
The big four will pass on cuts to variable loans from between May 30 and June 3 depending on the provider.
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