RBA Urges Australians to Switch Banks to Create Financial Pressure
Banks Encouraged to Pass on Better Savings Rates and Loan Rates by RBA
The Reserve Bank of Australia (RBA) has encouraged Australians to ‘switch banks’ if they are not receiving better savings or a drop in their mortgagor’s loan rate. Speaking to House of Representatives standing committee on economics last Friday (17 February), RBA governor Philip Lowe and deputy governor Michele Bullock cited record refinancing rates and the inquiry into bank deposit rates when asked about ‘mortgage pain’ for borrowers.
Mr. Lowe clarified that he was not “cheering on or excusing the high level of profits” banks are currently receiving. He suggested that Australians switch banks if they are unhappy with the interest rate their bank is paying, as there are many good deals available that offer four percent above on an at-call, full-functionality deposit account.
Related Facts
- The Australian government has announced an inquiry into bank deposit rates.
- Banks are very quick to pass on cash-rate decisions into loan rates, but most of them are very slow to pass on to deposit rates.
- There are bank accounts available at the moment where you need just to put in a couple of hundred dollars a month, and you’ll get an interest rate of four and a half percent.
Key Takeaway
The RBA has encouraged Australians to switch banks if they are not receiving better savings rates or a drop in their mortgagor’s loan rate. Switching and competition is the key to putting pressure on banks to increase deposit rates faster. There are many good deals available that offer four percent above on an at-call, full-functionality deposit account.
Conclusion
The RBA has encouraged Australians to take action if they are not receiving better savings rates or a drop in their mortgagor’s loan rate. Switching banks is the key to putting pressure on banks to increase deposit rates faster and to ensure that the pain of rising-rate environments is shared between banks and borrowers. There are many good deals available that offer four percent above on an at-call, full-functionality deposit account.
