Pain intensifies for savers as average ongoing rate plummets to 0.99%

The outlook for Australian savers just keeps going from bad to worse with new figures released today revealing a concerning new threshold has just been crossed.  

According to savings account figures in the Mozo database, the average ongoing savings rate has dropped below 1.00% for the first time since Mozo started tracking rates back in January 2012.

The average ongoing rate, which combines 184 different personal savings accounts with either an ongoing rate or ongoing bonus rate (which have minimum requirements), now sits at just 0.99%. 

“While the recent Reserve Bank rate cuts will have delighted Australian homeowners and eased mortgage stress, the same is certainly not true for savers,” said Mozo Director, Kirsty Lamont. 

“For the first time in over a decade the average ongoing rate in our database has dropped below 1.00%, with many banks now offering paltry savings returns of 0.10% and below.”

Are savings rates at record lows?

To put the current rate into perspective, the average ongoing savings rate in the Mozo database in November 2014 was 2.53% - almost triple that of the current average. 

As the graph below shows, the savings slide has essentially tracked the official cash rate over the past five years. Since November 2014, the cash rate has dropped from 2.50% to today’s level of 0.75%, though the correlation is likely to provide little solace for savers.

It goes back even further though. 

Historical figures from the Reserve Bank stretching back to September 1989 (data isn’t available beyond that) reveal that savings account rates have not hit current low levels at any time in the past 30 years. 

Lower rates, diminishing returns 

Just how much of an impact has the drop actually had on the interest Aussies can accrue from their savings accounts though? 

Let’s run through a scenario using the Mozo savings calculator. 

Regular saver Tim has already managed to save $10,000, which he adds $100 to each fortnight when he gets paid. If Tim was getting the average return from November 2014 of 2.53% he would end up with a balance of $18,915 after three years, including $1,088 in interest. 

In comparison, Tim would end up with a balance of $18,244 after three years if he was earning today’s average rate of 0.99% - a difference of $671. 

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While ongoing savings rates have been tumbling, there are still a number of options available for savers willing to meet minimum deposit requirements each month. 

For example, here are five of the highest bonus rate savings accounts currently* in the Mozo database.

For more details, including a complete overview of each account’s rate and requirements, make sure you check out the linked review. 

Otherwise for even more great introductory and ongoing savings account offers, check out the table below, or head over to the Mozo savings account comparison table to compare more than 200 different savings accounts from 60 banks.  

*Accurate as of November 18, 2019.