How Banks Are only ‘Partially’ Raising Rates for Savers

Why It Matters

The partial rate pass‑through squeezes everyday savers while boosting banks’ net‑interest margins, and rising competition could force broader rate hikes across the sector.

Key Takeaways

• Big banks raise bonus, not base, saver rates.
• 40% of savers miss bonus due to unmet conditions.
• Base rates rose 0.42 points, bonus 4.05 points.
• Smaller banks offer >5% savings, intensifying competition.
• Macquarie controls ~7% of $1.1 trillion US deposits.

Pulse Analysis

The Reserve Bank of Australia's recent cash‑rate hike to 4.1% was intended to curb inflation, but its impact on retail depositors is uneven. Large institutions have chosen to channel most of the increase into bonus‑saver accounts—products that reward customers for meeting balance or transaction thresholds—while keeping the baseline rates, which apply to the majority of accounts, almost flat. This selective transmission protects banks’ funding costs and preserves net‑interest margins, but it leaves roughly two‑fifths of savers earning rates that lag behind the broader monetary environment.

For consumers, the practical effect is a widening gap between advertised “high‑rate” offers and the actual earnings on everyday balances. Analysts estimate that base‑rate savers are receiving less than 2% annual return, compared with over 5% on the most competitive term deposits offered by challengers like Judo Bank and Great Southern Bank. As smaller players push higher, no‑strings‑attached rates, the big four may be compelled to broaden their rate pass‑through to retain price‑sensitive customers, especially as digital comparison tools make rate shopping more transparent.

The broader market implication extends beyond individual savers. With Macquarie now holding about 7% of roughly $1.1 trillion USD in Australian household deposits, the competitive pressure could reshape the deposit landscape, prompting legacy banks to revisit pricing strategies and potentially influencing future RBA policy decisions. Greater transparency, possibly driven by the Labor government’s proposed industry standards, would further empower consumers and could accelerate the shift toward more uniformly higher savings rates across the sector.