Yahoo Finance CBA’s ‘hugely disappointing’ decision on rate hikes
Commonwealth Bank has not yet passed on Tuesday’s cash rate hike to its savings accounts, despite hiking variable home loan rates.
All the other major banks have already passed on the 0.25 percentage points to their bonus saver accounts, according to RateCity.com.au, with Westpac also passing the hike on to its retiree account.
When asked about its bonus saver accounts, CBA did not rule out passing on the rate hike to other savings products in the future.
The bank said it regularly reviews its suite of savings products and any changes to these rates would be communicated via its online product pages.
Still, it’s not all bad news for customers of Australia's biggest bank.
Also read: Federal Election: Josh Frydenberg slammed for 'pathetic' tactic in debate
Also read: ‘Need a buffer’: RBA’s warning to 1.1 million Aussies
CBA has introduced an 18-month term deposit special at a rate of 2.25 per cent, paid annually, for balances between $5,000 and below $2 million.
This represents an increase of 1.95 per cent on its current rate.
This means if the bank’s customers want to take advantage of rate hikes, they will need to move their money into this account and leave it there for a year and a half.
“At 2.25 per cent for 18 months, this term deposit special is competitive, however, these kinds of products won’t suit everyone,” RateCity.com.au research director Sally Tindall said.
Tindall said CBA savings customers “have a right to feel ripped off.”
“This is a hugely disappointing decision from CBA.”
“Westpac, NAB and ANZ have all passed on the cash rate hike to their popular bonus saver accounts, and that was the right thing to do,” she added.
However, she noted that some of their customers with different accounts have also missed out.
“The hiking of the cash rate was meant to mark a turn-around point for savers. Instead, it’s fallen flat for millions of Australians.”
Why banks are reluctant to pass the hike on to savers
While there is an expectation banks will start lifting deposit rates, banks don’t have much motivation to encourage more saving.
That’s because Australians have already saved a lot over the pandemic.
March figures from the Australian Prudential Regulation Authority showed Australian households had a total of $1.26 trillion in the bank – an increase of $272.4 billion since COVID began.
Essentially, what this means is banks have more deposits than they can find a home for, so it’s in their interests to keep their interest rates low to encourage savers to go elsewhere.
While savers can only expect to see a fairly modest increase to their savings accounts under the latest rate hike, the expectation is that the 25-basis-point hike would be the first of many.
Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to the free Fully Briefed daily newsletter.
