March savings snapshot: How low can interest rates go?

Like a gymnast at a limbo competition, savings account interest rates keep edging lower. 

Over the last month, 37 different accounts monitored by Mozo’s data team saw reductions, with many conditional bonus rates tumbling down to sit worryingly close to their base rate counterparts.

This has brought the average ongoing savings rate to 0.40% – another 3 basis points (bp) down on last month – according to Mozo’s database.

Market leaders make changes

Moves are happening across the board, including in accounts leading the rate pack. 

The Macquarie Savings Accounts four-month introductory rate was cut from 1.35% to 1.10%. Its base rate, which was formerly the market leading unconditional rate, fell from 1.20% to 0.95%.

Meanwhile, ING introduced an additional interest-earning condition on its Savings Maximiser account. Now, to get the leading 1.35% bonus interest, savers will need to increase the balance in the account each month (not including interest). 

This is in addition to depositing at least $1,000 into a linked ING Orange Everyday account and making at least five settled transactions each month. These stacked conditions make it that little bit harder to get the most out of the savings account, whether you’re struggling to save money or simply forget to make the required deposits and transactions.

Big 4 loyalty despite big cuts

The trending gap between big four bank rates and the rest of the market has continued, with three out of the four (ANZ, NAB and CommBank) making multiple cuts to savings accounts last month. According to Mozo’s calculations, the average big bank savings rate is currently 0.16% – a substantial 25bp below the average of all other accounts.

Despite this widening gully, Mozo’s 2021 national savings report found more than half of Australians believe the major banks are the safest bet for their savings during uncertain economic times. 

While the savings rates show otherwise, 27% of people surveyed said they believed the big four offered more competitive options, and 44% said they banked with these players simply because “they always have”.

Data from the Australian Prudential Regulation Authority (APRA) shows 74.1% of Australia’s household deposits ($815 billion out of the total $1.099 trillion) are sitting in the big four banks.

If you’re considering parting ways with an uncompetitive savings account, check out some of the high interest options below.