Australia’s big four banks have moved one step closer towards zero-interest savings accounts, with the lowest base rate on offer now sitting at just 0.05 per cent.
NAB was the first major bank to deal a blow to savers. ANZ followed hot on their heels a week later.
And analysts say it’s only a matter of time until other banks follow suit.
NAB took an axe to interest rates last week for the second time in three months.
It cut the introductory rate on its iSaver by 0.15 per cent and the maximum rate on its conditional Reward Saver by 0.11 per cent, while leaving its home loans unchanged and increasing rates on its five-month term deposits.
“For savers, this will be a bitter pill to swallow and many will be left wondering why they’ve had to endure yet another cut when rates were already close to zero,” Ratecity.com.au chief executive Paul Marshall said at the time.
“Regular savers who strive for those maximum returns by meeting all the conditions will be the ones most impacted by these cuts, losing 0.11 per cent ongoing interest.
“But ardent savers can find competitive rates if they are willing to look beyond the big banks, with neo banks 86 400, Up and Xinja leading the way with conditional rates of 2.25 per cent.”
Meanwhile, ANZ cut rates on its standard savings account from 0.10 per cent to 0.05 per cent on Thursday – meaning customers with $10,000 in the bank would earn less than 50 cents in interest every month.
The bank made changes to its variable home loan and term deposit rates, too.
It cut the former by up to 0.20 per cent and the latter by 0.10 per cent.
Canstar financial services executive Steve Mickenbecker told The New Daily the deposit rate changes showed ANZ was trying to boost its margins after a succession of rate cuts had squeezed them.
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He said the mortgage rate cuts were driven by a desire to claw back some market share after the banking royal commission tarnished their reputation. (In August, it was offering 300,000 frequent flyer points to new customers.)
“They’re doing it with just one loan. They’ve trimmed rates, I guess, by offering a greater discount than usual. And they can unwind it quickly if they want to,” Mr Mickenbecker said.
Soon after ANZ cut its rates, the Australian Bureau of Statistics announced Australia’s unemployment rate had fallen from 5.3 per cent to 5.1 per cent – thanks to a significant increase in part-time jobs.
The small improvement in the unemployment rate dramatically reduced the chances of an RBA rate cut next month.
After the figures came out, ANZ and CBA publicly announced they were no longer forecasting a rate cut, while markets indicated the probability of a cut had fallen from 58 per cent to 30 per cent.
“We still think further rate cuts are more likely than not over the course of 2020, however,” ANZ economists Catherine Birch and David Plank wrote in a note.
“Continued weakness in consumer spending and soft business investment suggest that progress toward lower unemployment will stall at a level that is inconsistent with the RBA achieving its policy objectives.”
Indeed APAC economist Callam Pickering offered a similar take.
“With the bushfires likely to disrupt economic activity, and with the Reserve Bank already leaning towards cuts, we expect further easing in the months to come,” he said.
“A February rate cut is currently a coin toss, but it would make a lot of sense given the uncertainty surrounding the broader economy right now.”
A NAB spokesperson told The New Daily the bank regularly reviewed its prices on term deposit and savings account “to ensure we continue to offer competitive rates while responding to market changes”.
A spokesperson from ANZ also told The New Daily they “regularly review our rates and look to balance the needs of our customers whenever we make any changes, while remaining competitive.”