Chalmers calls on banks to pass rate rises on to savers

Treasurer Jim Chalmers has urged banks to pass on this week’s interest rate rise to savings accounts, saying an inquiry from the competition regulator would look into why lenders often dragged their feet when raising rates for savers.

Since the Reserve Bank started raising interest rates last May, banks have passed on the increases in full to their advertised mortgage rates. But the Australian Competition and Consumer Commission (ACCC), which is set to investigate the deposit market, last month said the rise in savings account rates had been “lower, slower, conditional or temporary”.

Chalmers, who last month said he had asked the ACCC to look at the issue, on Wednesday sought to up the pressure on banks to lift their deposit rates in line with the latest 0.25 percentage point increase in the cash rate.

“I think they should pass it on to savers. That’s my priority,” Chalmers said on ABC radio. “Obviously, we want people to get the best deal they can in their mortgages. We want them to have mortgages that they can afford to repay, and we want savers to get the benefit of these rate hikes – that should be the sort of silver lining in all of this and that’s my focus.”

ANZ Bank on Tuesday said it would lift mortgage rates by 0.25 percentage points from February 17, while raising the savings account rate on its digital platform ANZ Plus by 0.25 percentage points to 4 per cent a few days earlier, on February 14. However, the bank did not announce savings rate rises for its flagship ANZ accounts, where most of its customers have their money.

National Australia Bank also said it would raise mortgage rates by 0.25 percentage points in response to the latest move, but it did not announce changes to deposit rates. In past months it has raised some savings account rates in weeks following the Reserve Bank.

At the time of writing, neither Commonwealth Bank nor Westpac had announced changes in response to this week’s rate rise.

Although the ACCC says it has not yet received formal terms of reference from the Treasurer, Chalmers signalled that a key focus of the regulator’s probe would be the time it takes for rate rises to be passed on to savings accounts.

“If you’re relying on your savings and interest rates go up, it typically takes longer for the benefits to be passed through than it takes for the interest rate rise to be passed through to mortgage holders. That’s my focus. I’ve got the ACCC on the case,” he said.

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