Savers dealt blow by major bank
National Australia Bank has bowed to the pressure of the low interest environment, slashing savings rates across a slew of deposit accounts.
The country's major business bank has taken a knife to both its standard and conditional savings accounts, cutting the headline rates by 15 basis points.
NAB's standard iSaver now attracts a five-month introductory rate of 0.45 per cent before reverting to an ongoing rate of 0.05 per cent.
Its conditional deposit account now has a maximum rate of 0.4 per cent.
NAB's decision to enact an out-of cycle rate cut follows similar moves by Westpac and Commonwealth Bank, which carved savings rates earlier in January.
RateCity research director Sally Tindall said NAB's decision was no surprise, as a lack of competition in the market was allowing banks to cut rates quietly.
"NAB's decision follows similar moves from rivals CBA and Westpac last week as the low-rate environment continues to pressure profit margins," Ms Tindall said.
"A distinct lack of competition in the market is allowing banks to quietly chip away at their rates without too much blowback."
ANZ is the only major Australian bank yet to lower savings rates as a result of the low interest rate environment that has been spurred on by the coronavirus pandemic.
The Reserve Bank of Australia since the start of COVID-19 has lowered the official cash rate three times to a position of 0.1 per cent.
A lower cash rate reduces the cost of borrowing for banks and i passed on in the form of cheaper loans to businesses and households.
However, a lower interest rate makes it more expensive for banks to retain savings rates at higher levels.
According to RateCity, the average ongoing savings rate is 0.38 per cent, and only 15 banks are now offering a rate higher than 1 per cent.
ING has the highest ongoing rate at 1.35 per cent.
"Right now, around 60 per cent of Australians have their money with CBA, Westpac and NAB and their subsidiaries despite the fact that some of these savers are getting rates as low as 0.05 per cent," Ms Tindall said.
"NAB customers would do well to shop around. There are 15 banks offering ongoing rates of 1 per cent or higher, including NAB's newly acquired 86 400 at 1.20 per cent."
Originally published as Savers dealt blow by major bank