Interest rates for savers 'have already peaked'

Monday 29 March 2010

Article by Mozo

Interest rates on savings accounts and term deposits are falling, a commentator has noted.

Writing in the Sun Herald, finance columnist David Potts criticised banks and other financial institutions for raising interest rates on credit cards and home loans while cutting rates for savers.

He noted that while Westpac recently warned that home loan rates will continue to rise, the bank chose to cut its five-year term deposit rate from eight per cent in December to 7.05 per cent last month and 6.85 per cent last week.

"Surely if the five-year term deposit rate has dropped then the five-year fixed lending rate should too. Not on your nelly. Consistency is one thing but profits are another," said Mr Potts.

Meanwhile, the columnist suggested that financial institutions may alter their policies on term deposits if the government chooses to cut the tax on interest from savings accounts, as recommended by the Henry report. Such a move could also affect Australians who wish to compare
savings accounts.

Referring to the term deposit rates on offer at smaller institutions, Annette Sampson from the Sydney Morning Herald recently noted that Aussies willing to lock their money away for a year could get rates of 6.5 per cent at MECU and Bank of Cyprus, or seven per cent for a three-year term.

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