Savings rates set to plummet further as October RBA cut looms

The Reserve Bank’s monthly meeting takes place tomorrow, and homebuyers and mortgage holders are waiting with bated breath for another reduction to official interest rates.

Of course, the inverse of all this is that savings rates are also set to drop. Assuming banks reduce their rates by 0.25%, an October cut would bring the average interest rate for savings accounts down to 0.90%.

“With a third, and possibly a fourth cut likely this year, there is significant downward pressure on savings rates,” said Mozo interest rate expert Peter Marshall.

“A 25 basis point cut next week could sound the death knell for some of the most popular standard savings accounts in the country.”

How much have the big banks cut already?

Since June’s cut, we’ve seen reductions to savings accounts from all 77 deposit-takers in our database. Even some of the highest interest savings accounts have lost some of the glimmer they had earlier in the year.

The big banks have certainly been leading the charge. All up, ANZ, CommBank, NAB and Westpac have hacked off between 0.30% and 0.45% from their average savings rates following both June and July’s rate cuts:

  • ANZ cut 0.30%
  • CommBank cut 0.35% 
  • NAB cut 0.45%
  • Westpac cut 0.35%

It’s safe to say the interest rate environment isn’t going to change course any time soon, so savers are going to have to settle in for the long haul. 

Right now, it pays to know what kinds of rates are out there so you can switch if you’re getting subpar returns from your current account. Our savings account comparison page is a good place to start.

“If you are looking for a savings account, currently the leading ongoing bonus rate in our database is 2.50% available through the Bank of Queensland or online banks 86 400 and Up. That’s 1.35% higher than the average,” said Marshall.

“If you don’t need to access your savings on a regular basis you could also consider hedging against a further official rate cut by switching to a fixed term deposit.” 

So if you’re eyeing term deposits - which are a good way to guard against falling rates - our term deposit comparison page can help you find the right one.

Savings account comparisons on Mozo - last updated 3 December 2023

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