Aussies using savings accounts 'helping prevent rate rises'

As more Aussies look for high interest savings accounts to put money away rather than spend it, the case for banks increasing savings interest rates diminishes, according to one analyst.

Figures from the Australian Prudential Regulation Authority, the RBA and Standard & Poor revealed that over the last five years, the proportion of funding for banks from domestic deposits has risen from less than 45 per cent to about 50 per cent.

Victor German, banking analyst with Nomura, told the Herald Sun that financial institutions in the country do not need to increase lending rates outside of any move made by the Reserve Bank of Australia (RBA).

As Aussies step up their use of savings accounts, the country's financial institutions are provided with a buffer against the increased cost of borrowing funds on global markets.

Earlier this week, Westpac chief economist Bill Evans said in an article for Business Spectator that the RBA should drop the cash rate from its current level of 4.75 per cent to prevent an increase in unemployment figures.

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