Westpac cuts savings rates

Although most savings rates are reduced by -25 basis points in line with OCR cut, some are cut by more

15th Jun 15, 10:54am by David Chaston

Westpac has announced interest rate reductions to their savings accounts following last weeks RBNZ -25 basis points cut.

The Red Bank has cut savings rates by between -20 and -35 bps.

Their Business Online Saver has seen its rate reduced by -30 bps to 2.70% from 3.00%.

Their 32 Day Notice Saver rate has been reduced by -35 bps to 2.75% from 3.10%, although their on hold rate was reduced only -20 bps to 3.90%.

All other savings rates have been cut by -25 bps.

These changes continue Westpac's recent trend of holding on to some of the RBNZ policy cut.

The bank only reduced its main floating mortgage rate by -19 bps.

And earlier, Westpac reduced many term deposit rates to the lowest of the main banks.

Westpac's new Savings rate card is:

Product / Account	Current Rate	New Rate	Change
Online Bonus Saver/PIE - Base Rate - Bonus Rate - Potential Rate (base + bonus)	0.10% 4.05% 4.15%	0.10% 3.80% 3.90%	Nil -0.25% -0.25%
32 Day Notice Saver PIE: - On Hold Rate - On Notice Rate	4.10% 3.10%	3.90% 2.75%	-0.20% -0.35%
Online Saver/PIE	3.00%	2.75%	-0.25%
Business Online Saver	3.00%	2.70%	-0.30%
30 Day Term Deposit/Term PIE	3.00%	2.75%	-0.25%
Simple Saver	2.00%	1.75%	-0.25%
Earner: $5,000 - $50,000 $50,000 - $100,000 $100,000 +	0.75% 1.75% 2.50%	0.50% 1.50% 2.25%	-0.25% -0.25% -0.25%

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10 Comments

by Zoltuger | 15th Jun 15, 12:32pm 1434328348

Strange, I don't remember savings rates going up 25bps each time the OCR increased.

Will other banks follow the cuts? If they don't, will Westpac reverse the cuts?

by David Chaston | 15th Jun 15, 2:59pm 1434337192

But savings accounts generally did go up when the RBNZ raised its policy rate. These sorts of products are generally funded off the 90 day bank bill rate, itself directly influenced by the OCR change.

by Stephen Hulme | 15th Jun 15, 3:28pm 1434338937

These sorts of products are generally funded off the 90 day bank bill rate, itself directly influenced by the OCR change.

Do you mean The bank only reduced its main floating mortgage rate by -19 bps.?

If so, how does this square with the RBNZ claim?

Short term wholesale debt funding has been replaced with retail deposits and long-term wholesale debt funding. Retail deposits and long-term wholesale debt funding are both considered “stickier” and more stable sources of funding.There are a few reasons for this shift towards more stable sources. Read more page 2 of 10 (16/24)

by sharetrader | 15th Jun 15, 11:26pm 1434367563

and the savers are not getting value for the risk that the banks are lending on

by steven | 16th Jun 15, 7:05am 1434395124

Correct IMHO, so the savers should withdraw their money, the Q is where to put it?

by bigblue | 15th Jun 15, 9:24pm 1434360255

No doubt many of those dissatisfied with their interest rate on term investments will pull the money out and put it into a residential investment property or go shares with their kids in one. More fuel to the fire eh!

by MortgageBelt | 15th Jun 15, 9:44pm 1434361466

Or allow their savings to be linked as an offset account to their kids mortgage account thus saving the kids mortgage interest. After all 2.5/3% interest less tax on a term deposit is hardly worth bothering.

by steven | 16th Jun 15, 7:07am 1434395250

Indeed I am not saving much right now just over-paying on the mortgage, 2% or so after tax v 6%. Does it dodge paying tax on the interest earned?

by MortgageBelt | 16th Jun 15, 8:16am 1434399361

You don't pay tax on the interest avoided, so effectively a 5.5% return, no tax.

by steven | 16th Jun 15, 7:10am 1434395400

I doubt it as many of the saved are OAPs? and need that income to live on they are also highly risk adverse I'd suggest.

Do we have a breakdown of depositors by age?

I'd suggest BBs might well help the kids while they are earning, but once retired?