Major losers of RBA interest rate cut revealed: ‘Double-edged sword'
Westpac was the first of the major banks to confirm it would lower interest rates by the full 0.25 per cent on its Westpac Life and eSaver savings accounts. The rate cut will rate the total interest rate to 4.75 per cent for both savings accounts, effective February 28.
Westpac chief executive consumer Jason Yetton said the bank considered a range of factors when making interest rate decisions, including the needs of both borrowers and savers.
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'Savers can continue to access competitive products, with headline interest rates still above the official cash rate,' Yetton said.
'Customers with a Westpac Life account can also receive bonus interest by boosting their balance by just one dollar each month.
'We're continuing to alert customers to this through our app, with 85 per cent of balances receiving this rate.'Commonwealth Bank, NAB and ANZ are yet to announce any changes to their savings account rates, with CBA noting it would maintain its current 10-month term deposit special of 4.60 per cent 'for a limited time'.
Aussies currently have a whopping $1.571 trillion in household deposits with the banks, the latest APRA data found, up from $1.542 trillion in October 2024.
'While rate cuts may provide a financial lifeline for some home loan borrowers, lower rates may prove limiting for the many Australians who rely on cash deposits as a regular source of income,' InvestSMART Group CEO Ron Hodge said.
'This includes the 32 per cent of Australian homeowners who don't have a mortgage, and the nation's 4.2 million retirees.'
All of the major banks already started cutting their term deposit rates ahead of the RBA's decision this week.
NAB and ANZ made a range of cuts of up to 0.20 per cent, Westpac cutting its 11-month special rate by 0.05 per cent and CBA cutting rates by up to 0.95 per cent and making a small handful of hikes.
Canstar data insights director Sally Tindall said Aussies with money in term deposits could get a 'shock' when their fixed period matures and they are faced with much lower interest rates.
'For those looking to lock up their hard-earned money in another term deposit, time may be of the essence,' she said.
High-interest savings accounts are also expected to tumble following the RBA's move.
'Savers looking to extend the high-rate honeymoon for as long as possible should shop around for a competitive rate before they start to fall,' she said.
'Banks are expected to pass on cash rate cuts to their savings customers, however, moving your nest egg into a high interest saving rate should help cushion the blow.'
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