Leading banks are racing to cut interest rates offered to savers, despite the Reserve Bank leaving the official cash rate on hold this month, as households flood banks with deposits.
ANZ on Friday cut the full rate on its progress saver account from 3.5% per year to 3.4% despite the RBA leaving its target rate unchanged a week earlier in a shock move.
Westpac dropped its reward saver rate by 0.05% in June, taking the bank’s total cuts to the rate to 0.65% since February. The RBA has only cut its target rate by 0.5% over that period.
Both banks have also cut rates on their alternative savings products over the year, in line with the Reserve Bank.
Ubank has slashed its rate by a much greater 0.9% over 2025. On Tuesday, Ubank cut its savings rate to just 4.6%, while adding a temporary bonus for new customers and a higher threshold on account balances.
Bendigo Bank dropped its EasySaver rate by 0.1% in July, according to Canstar tracking.
Major lenders have cut the rates offered to savers faster than the RBA has cut its own key interest rate since the start of 2024 – narrowing returns paid to customers and boosting bank profits.
Rates have fallen further for standard or online accounts, which have no conditions, though conditional bonus account rates are also sliding as banks cut their losses. Only four banks are now offering widely accessible accounts with interest rates of 5% or more, Canstar’s database shows.
The slide is a sign banks are taking advantage of Australians’ high demand for savings accounts instead of competing for deposits, according to Sally Tindall, the data insights director at Canstar.
“Money in the bank is at a record high, so banks aren’t having to compete for people’s deposits,” she said.
“Australians are absolutely focused on putting their funds away for a rainy day [so] the banks are flush with cash.”
Guardian Australia has previously asked major banks about their decisions to trim unconditional savings rates, pushing customers towards conditional rates, before cutting the conditional rates as well.
A Westpac spokesperson in June said interest rates were affected by market pressures.
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“In making interest rate decisions, we consider a range of factors including the cost of funds and the broader market environment, balancing the needs of both borrowers and savers,” the spokesperson said.
Lenders have enjoyed increased freedom to cut rewards for savers as the volume of savings rises, with workers setting aside a rising proportion of their incomes as cost-of-living pressures ease.
National data released in May showed the proportion of household income saved rather than spent had risen to its highest level since 2022.
The rising share of income dedicated to saving has seen households’ deposits in banks soar to a record $1.62tn in 2025, rising by $24bn over the five months to May, data from the banking regulator shows.
The Reserve Bank is expected to cut interest rates in August despite surprising markets in July, with economists predicting the cash rate will fall 0.25%.
That would see further cuts to interest rates, which would benefit mortgage holders but likely wipe out the handful of savings accounts still offering a 5% annual return, according to Tindall.
“Cash rate cuts are a double-edged sword and we so often see banks [pass] that cut on to savers faster than they do to their mortgage rate customers,” she said.
