The nation’s savers may breathe a sigh of relief if the central bank leaves the cash rate unchanged at its next board meeting, as many economists expect.
Some observers believe the Reserve Bank of Australia (RBA) has finished cutting rates in the current easing cycle, after reducing the cash interest rate to an all time low of 2.5 per cent in August.
It’s made 225 basis points worth of reductions to the rate, which underpins commercial lending rates, since November 2011.
But there has been a downside if you aren’t a mortgage holder.
Some savers have seen investment returns plummet by as much 230 basis points.
“If the Reserve bank leaves the cash rate unchanged it will be a timely gift for savers this Christmas,” financial comparison website finder.com.au spokeswoman Michelle Hutchison told AAP.
However the average reduction over the past two years on the 21 high interest savings accounts monitored by the website has been 69 basis points – about 156 basis points less than the RBA’s cumulative reductions.
Even so, savers with $20,000 in the bank would have missed out on about $300 in interest over a two year period.
The RBA cuts would have impacted on about 6.4 million households which don’t have a mortgage and rely on savings, Ms Hutchison said.
But savers have faired better than borrowers, who’ve missed out on 53 basis points of home loan reductions when the RBA cuts weren’t passed on by their lenders.
Meanwhile, some major banks are now lifting fixed rate home loans, which can be a precursor to rises in variable interest rates.
“They are still much lower than the past two years, so there’s no need for Australians to panic,” Ms Hutchison said.
The average one-year fixed home loan being offered on November 1 was 4.94 per cent – 156 basis points lower than on November 1, 2011.