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Common logic has it that homebuyers win and savers lose when interest rates fall. But if the results of a recent survey commissioned by Mozo are to be believed, falling interest rates are helping not hindering our national savings rate.
Six in ten Australians say that cuts to interest rates have incentivised them to save harder than they were six months ago. While falling interest rates are putting a strain on savers’ returns, it seems we’re saving harder than ever to make up for the shortfall.
But here’s the rub: that shortfall could be more than you realise. Over the last six months, a number of savings providers have cheekily cut interest rates by more than the Reserve Bank.
November 2008 - May 2009
| Savings institution | Average rate cut | Best current rate |
|---|---|---|
| RaboPlus | 2.50 | 4.00 |
| ING Direct | 2.60 | 3.50 |
| St George | 2.72 | 3.20 |
| NAB | 2.88 | 2.75 |
| ANZ | 2.92 | 3.50 |
| Commonwealth Bank | 3.00 | 2.75 |
| Suncorp | 3.00 | 3.50 |
| one direct | 3.00 | 4.00 |
| Citibank | 3.00 | 2.75 |
| Bendigo Bank | 3.10 | 1.75 |
| Bank of Queensland | 3.15 | 3.25 |
| Westpac | 3.18 | 2.90 |
| HSBC | 3.25 | 3.25 |
| BankWest | 3.26 | 5.00 |
| AMP | 3.30 | 4.35 |
| Members Equity Bank | 3.50 | 4.00 |
| Macquarie | 4.60 | 3.15 |
Notes:
Reserve Bank rate cut over this period was 3.0%
Best current rates correct as at 28/5/09 and do not include intro rate offers
The table above shows that 8 out of 17 major financial institutions have cut interest rates on savings accounts by more than the Reserve Bank’s 3.0% since November 2008.
Bendigo Bank and Westpac are amongst the worst offenders to cut rates by more than the Reserve Bank, sending their best available savings rates plummeting to 1.75% and 2.90% respectively.
In better news for savers, the analysis also revealed that a handful of institutions have consistently cut interest rates by less than the Reserve Bank over the last six months.
RaboPlus and ING Direct have been kindest to savings customers, having cut rates by just 2.50% and 2.60% respectively to maintain consistently competitive savings products.
This research highlights the need for savers to be vigilant about monitoring interest rates. Many savers who had competitive rates when they first opened their account are now getting a dud deal.
Compare savings accounts now to check your rate against the best in the market.
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The Bank of Queensland has promised its customers that it will not be hiking its interest rates.
It seems that further cuts to interest rates in early 2012 are a mere formality, as new figures have shown that inflation slowed down towards the end of 2011.
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