Home loan interest rates hike faster than savings account rates

Piggy bank on divided background: home loan vs. savings rates.

Banks may have some favouritism regarding which interest rates they hike, according to the latest analysis from Mozo.

Between July and November 2023, the Reserve Bank of Australia lifted interest rates by 0.25%. However, in the Mozo database, the average interest rates for home loans and savings accounts grew by vastly different amounts.

Home loan interest rates for owner-occupiers and investors rose by nearly 0.50% regardless of repayment type (P&I or IO). This could be the culmination of both the June and November rate hikes flowing through to customers.

However, introductory rates for savings account holders only rose by 0.22% – under half the rate of home loan growth. Ongoing savings rates just lifted 0.15%. 

Why hasn’t my savings interest rate gone up?

Every time the RBA raises the cash rate, it’s supposed to tighten the economy by making spending on assets, like home loans, more expensive, while deposits become more attractive. But if this is the logic, why is there a gap between how much savings accounts and mortgage rates have increased?

The reality is that banks and lending institutions have no obligation to pass along any rate hikes. The cash rate affects their operating costs, so banks usually raise profitable interest rates – like mortgage rates – to help cover their losses. Lifting deposit rates is a way of retaining customers.

However, if your home loan interest rate has lifted a lot, but your savings accounts aren’t improving, it may be time to search for a better option. This is especially true if your savings aren’t in an offset account – a type of savings account that saves interest on your home loan. 

A quick look into Mozo’s database reveals the best mortgage rates are under 6%, and the best savings rates are over 5%. Finding a good place to park your money can make all the difference in a time of high living costs

Compare high-interest savings accounts in the table below.

Compare high interest savings accounts

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Last updated 24 July 2024 Important disclosures
  • Savings Account

    5.35% p.a. (for $0 to $250,000)

    4.75% p.a.(for $0 to $1,000,000)

    Yes up to $250,000

    Bonus variable rate is available for the first 4 months.

    Competitive introductory variable rate for first 4 months (on deposits up to $250,000). No account keeping fees to pay. Multiple 2024 Mozo Experts Choice Award winner.

  • Reward Saver Account

    5.25% p.a. (for $0 to $1,000,000)

    0% p.a.(for $0 and over)

    Yes up to $250,000

    Intro bonus rate of 5.25% for balances up to $1,000,000 for the first 4 months, reverting to 3.25%. Minimum deposit of $50 and no withdrawals.

    Introductory bonus rate for balances up to $1,000,000 for the first 4 months. Minimum deposit of $50 and no withdrawals. Start your account online in under 10 minutes and earn interest on balances up to $1,000,000 (T&Cs apply). No monthly account fees, helping you save smarter and faster.

  • Bonus Saver Account

    5.00% p.a. (for $0 to $250,000)

    0.05% p.a.(for $0 and over)

    Yes up to $250,000

    Bonus rate when at least $20 is deposited each month and five Visa Debit transactions are made each month using linked Glide transaction account.

    Start saving and earn interest with just a $20 deposit and make 5 eligible transactions each month. No fees or penalties for withdrawing money.

  • Savings+Bonus

    5.00% p.a. (for $0 to $250,000)

    2.00% p.a.(for $0 to $250,000)

    Yes up to $250,000

    Minimum $100 monthly deposit and no withdrawals to earn bonus interest each month.

    Earn a generous interest rate on your at-call savings (T&Cs apply). Interest is calculated daily and paid to you monthly. A $5 monthly membership fee will not apply if your total account balances with First Option Bank exceed $1,000 or you have a credit card or loan with the bank.

  • Mozo Expert Choice Badge
    Savings Maximiser

    5.50% p.a. (for $0 to $100,000)

    0.55% p.a.(for $0 and over)

    Yes up to $250,000

    For customers who have an Orange Everyday account, deposit $1000 into a personal ING account, make 5 eligible transactions and grow their nominated Savings Maximiser account each month.

    Great variable rate every month when you grow your balance each month in addition to other eligibility criteria. No ING fees to pay. Save even more with ING Everyday Round Up. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^


^See information about the Mozo Experts Choice Savings Account Awards

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