Australian savers are being left behind as lenders quickly pass on the Reserve Bank's interest rate hikes to mortgage holders while keeping savings rates low, according to new analysis.
Disparity in Rate Pass-Through
Research from financial comparison website RateCity shows that the major banks have passed on the full 0.25 percentage point rate hike to variable mortgage customers, but have only increased savings rates by an average of 0.10 percentage points. This disparity means that savers are not benefiting equally from the RBA's tightening cycle.
RateCity research director Sally Tindall said the banks are prioritising their profits over customer fairness. "It's a tale of two customers: mortgage holders are copping the full brunt of the rate hikes, while savers are getting crumbs," she said.
Impact on Households
The uneven pass-through is exacerbating the cost-of-living pressures on Australian households. While mortgage holders face higher repayments, those relying on interest income from savings are seeing minimal gains. This is particularly tough for retirees and other savers who depend on interest earnings.
According to the analysis, the average ongoing savings rate across the big four banks is now just 1.05%, well below the current inflation rate of 6.1%. In real terms, savers are losing purchasing power.
Call for Action
Consumer advocates are calling on banks to do more for savers. "Banks need to share the wealth more evenly," said Tindall. "They are quick to hike mortgage rates but slow to boost savings rates."
The RBA has raised the cash rate by 0.25 percentage points to 0.35%, the first increase in over a decade. Further hikes are expected, which could widen the gap between mortgage and savings rates if banks continue their current approach.
Savers are urged to shop around for better deals, with some smaller banks and online lenders offering rates above 2%. However, switching accounts can be a hassle, and many customers remain loyal to their existing bank.
